Gogo is ruled by the Shorts
Gogo Inc (GOGO) shares have fallen 18% since the start of the new year. It is a not a 'Happy New Year' for Gogo shareholders.
WHY IS IT DOWN SO MUCH?
Short interest. The short interest in Gogo has increased 9% since last month clocking in at an incredible 33% (shortsqueeze.com). One-third of the Gogo shares out in trading land are positioned short. A major slap in the face to all who are long in the stock. Finviz.com clocks GOGO short interest at 28%, Yahoo Finance has the same number. Gogo shareholders are powerless as they await the next earnings call, until then volatility rules this stock.
Gogo shares are now below a key support level of $14. Unless we hear from the company before the Feb 23rd earnings call expect more of the same.
The current target price estimates are garbage. All of the firms covering the stock won't make a move until they hear the numbers next month. Due to the high short interest Gogo could rage in either direction following the results. The only thing the Street will care about is the guidance. If Gogo can't rake in more revenue, prove they are growing, or show they can make 1 penny in profit -- down the stock will go. However expectations are low at this point and that could work in favor for the longs.
It will take the shorts 17 days to cover at this point, that implies the stock could bounce 15 to 20% on any positive news on Feb 23rd. Gogo has the technology and AT&T is not persuing efforts to knock the company out of the sky. We have gone on record before urging the company to offer a lower cost alternative to only allow texting, say at a $5 price point.
Bottom line: Gogo can't worry about the share price, they can only execute on their business and hope Wall Street responds. Until next month, expect rocky trading. This round goes to the shorts.
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