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PreMarket Prep Stock Of The Day: Gogo

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PreMarket Prep Stock Of The Day: Gogo

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Of the hot stocks discussed Tuesday on PreMarket Prep, one of the biggest winners on a percentage basis is in-flight internet provider Gogo Inc. (NASDAQ: GOGO), the PreMarket Prep Stock of the Day.

Gogo A No-No Since December 2013: While the S&P 500 index has nearly doubled since its peak in December 2013, Gogo has shed 82%.

After peaking in December 2013 at $35.77, it cratered to $1.33 in May 2020, well after the index bottomed.

Although its 388% rally off that low — using $6.50 as the baseline — is impressive, a vast majority of investors in the issue aren't connected to any profits.

What Gogo Did: Gogo was originally a U.S.-based in-flight connectivity system and service provider.

The company, through its subsidiaries, offered aero communications, in-flight broadband and wireless in-cabin digital entertainment solutions for the aviation industry.

In addition, the company offered connectivity and entertainment services to commercial airlines flying routes within North America; satellite-based connectivity and entertainment services to foreign-based commercial airlines and North American-based commercial airlines flying outside North America; and a variety of in-flight internet connectivity and other voice and data communications products and services.

Gogo's Itinerary Change: After the close Monday, the company announced that it has entered an agreement to sell its commercial aviation business to now-bankrupt Intelsat SA (Pink: INTEQ) for $400 million in cash. 

Gogo plans to remain public and said it will use the proceeds from the sale to pay down debt and to further explore potential growth opportunities, such as Gogo 5G.

As a result of lower financing costs, the company will be better suited to improve the profitability of its business aviation segment.

Gogo's Premarket Price Action: When Gogo's change of business was being discussed on the PreMarket Prep show Tuesday, the issue was trading at the $6.50 area.

"It was good lift for a company that was trying to reinvent itself," said co-host Dennis Dick. 

"Anything can happen if the Robinhood traders get a hold of it, but there is a brick wall at $7." 

The author of this story concurred with the analysis, noting that the premarket high stood at $6.89.

Producer Spencer Israel said the Gogo-Intelsat deal should not have come as a surprise, as Gogo said in its second-quarter report Aug. 10 that it was in the process of selling its commercial aviation division. 

Gogo's Regular Session Price Action: After a higher open, Gogo made a brief retreat, but found support well ahead of the top of Monday’s range ($5.24), only reaching $5.85 and resuming its move higher.

As of 1 p.m., Gogo is trading within a penny of its premarket high — up 33.77% at $6.88 — on nearly 10 times its average volume. 

 

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