Boingo Wireless Will 'Soon Swoon,' Warns The Street Sweeper

Boingo Wireless, a provider of commercial mobile Wi-Fi Internet solutions and indoor direct-attached storage (DAS) services for carriers, is the latest company to be negatively featured by The Street Sweeper.

The Street Sweeper's Sonya Colberg published a research report on Thursday, arguing that the stock will "soon swoon."

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"Boingo Wireless is all dressed up for the ball, jitterbugging in white loafers while the competition coolly waltzes away with the belle of the ball," Colberg wrote. "Try as it might, the Wi-Fi hot spot provider has been slightly out of step since its founding in 2001."

Increased Competition

Meanwhile, the company faces ongoing competitive and technological threats. As an example, competing technologies such as 4G, WiMAX and Super Wi-Fi are "gathering momentum" to "push out" use of Wi-Fi, similar to how DVDs made video tapes obsolete. Colberg even added that Boingo doesn't offer anything "unique" and uses unlicensed spectrum to provide Wi-Fi, which may be an issue as "everybody can use the same unlicensed spectrum."

Naturally, the company's greatest threat might be the fact that airports, coffee shops, hotels and other public venues are offering free Wi-Fi service. This practice continues to become more and more common, "upping the debilitating risk" to Boingo over time.

'That Can't Be Good News'

Colberg moved on to point out that Boinger insiders haven't purchased "one single share" of the company's stock on the open market. At the same time, "selling frenzy participants" include senior management members. Specifically, the company's CEO David Hagan has sold almost 100,000 shares since June, while its CFO Peter Hovenier only holds just over 56,000 shares after selling more than half of his stake since June.

"So, the executives and directors – the very people who know better than anyone about the company's prospects – are rapidly selling company stock," Colberg stated. "That can't be good news."

Colberg also added that while management continues to sell its stake while handing investors a "bouquet of losses," executives have "plucked up" $7.2 million in compensation – while the firm generated a loss of $13.7 million in the first half of the year.

Finally, Colberg suggested that "the ball is over" and Boingo's stock should soon "crumple" to a "more realistic" valuation of around $4.50 per share.