Executives from Boingo Wireless Inc. were scheduled to ring the opening bell at NASDAQ on Monday. But last week, it was more like the bell rang them: The Westwood-based Wi-Fi hotspot provider was the biggest loser on the LABJ Stock Index, with shares falling 24 percent for the one-week span ending June 8.
Boingo filed a much-anticipated IPO on May 3, beating estimates and raising $78 million, with shares priced at $13.50. But by June 8, the stock had swooned to $7.41, down 45 percent.
The company on June 7 reported a net loss of $329,000 for the first quarter, compared with a net loss of $127,000 in the first quarter last year. However, adjusted earnings were $5 million, a 19 percent increase.
Boingo has two main lines of business. It sets up hotspots in airports and the like and then sells Internet service directly to consumers, who may buy by the hour, although some regular consumers buy monthly subscriptions. That represents 50 percent of its business. Its other line involves selling Wi-Fi wholesale to cellular carriers, which in turn make it available to their customers. That accounts for 45 percent. (Advertising is the remaining 5 percent.)
Mobile carriers such as Verizon and AT&T are now providing Wi-Fi service as part of their plans. Boingo could sell to such carriers, but the carriers increasingly may be attracted to newer suppliers, one expert said.
“Increasingly the opportunity is to make Wi-Fi a single monthly fee rolled in with the cellular carrier,” said Phil Leigh, founder of market research firm Digital Media Inc. in Tampa, Fla.
Boingo faces increased wholesale competition from new entrants like Rhode Island-based TowerStream. That company plans to unveil a 7-square-mile coverage area in Manhattan later this month and has similar plans in Chicago and San Francisco. The larger coverage means TowerStream sells its services to carriers at competitive rates.
“Cellular carriers will offer Wi-Fi as an enhanced service, and they’ll buy it from a wholesaler like TowerStream,” said Leigh. “That will put pricing pressure on Boingo. Boingo doesn’t have the extensive network that TowerStream has.”
Boingo didn’t return calls for this article.
After their stop at NASDAQ Monday, executives will make an investor presentation at Credit Suisse Software and Internet Conference in Boston on Wednesday followed by The William Blair 31st Annual Growth Stock Conference in Chicago Thursday.
