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

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

  • Shares of Boingo Wireless Inc (NASDAQ: WIFI) lost nearly 2 percent on Thursday after The Street Sweeper commented the stock will "soon swoon."
  • Street Sweeper noted that the company "has been slightly out of step" since its founding in 2001.
  • The report added that company insiders are still selling the stock, even though it has declined $3 per share since August.
  • 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

    According to Colberg, the company's business mostly revolves around its DAS system and faces increasing competition from industry giants AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). In fact, the company has even acknowledged that its "well-heeled" partners can turn into direct competitors.

    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.

    Image Credit: Public Domain

    Latest Ratings for WIFI

    DateFirmActionFromTo
    Feb 2019MaintainsOutperformOutperform
    Nov 2018AssumesBuy
    Aug 2018MaintainsBuyBuy

    View More Analyst Ratings for WIFI
    View the Latest Analyst Ratings

    Posted-In: DAS Service Carriers David HaganAnalyst Color Long Ideas Short Sellers Short Ideas Analyst Ratings Trading Ideas Best of Benzinga

     

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