Wi-Fi Investors Want Better Connection for Shares

0

Although Boingo Wireless Inc.’s initial public offering last week hit the company’s target, there wasn’t much bounce in the Wi-Fi network operator’s stock price.

One IPO expert said the Santa Monica company’s stock might have been trading low last week because institutions gobbled up large numbers of shares, leaving little room for individual investors to stoke the stock.

“The allocations to individuals were small,” said John Fitzgibbon, owner of research website IPOScoop.com in Edison, N.J. “It’s the institutions that flipped it.”

Boingo raised $78 million in its offering May 3, selling 5.8 million shares at $13.50 each. It had planned to raise $75 million, so the offering met the company’s goal.

But the stock, which trades under the ticker symbol “WIFI,” opened at $12.50 on May 4 and closed down 10 percent for the day at $12.10. The price closed at $12.18 on May 5.

Boingo, founded by Internet entrepreneur Sky Dayton in 2001, operates more than 325,000 wireless Internet locations in public areas such as airports, coffee shops and hotels.

Most of the company’s revenue comes from month-to-month subscription plans from frequent customers or per-use fees. Boingo also makes money from contracts with telecom operators that give cell phone users access to the company’s Wi-Fi hotspots.

Boingo had $80.4 million in revenue last year, up 22 percent from 2009, and net income attributable to stockholders of $10.7 million, compared with a net loss of $4.2 million in 2009.

A Boingo spokeswoman declined to comment citing the quiet period of the offering.

The company filed to go public in January as interest built up on Wall Street for technology IPOs, including Santa Monica’s Demand Media Inc. The robust public offering market suggested to many analysts that Boingo had the potential for a strong debut.

Boingo sold 3.85 million of its own shares in the public offering, and shareholders sold 1.92 million. The company plans to use proceeds from the IPO, which was underwritten by Credit Suisse Group and Deutsche Bank Securities, to fund expansion, acquisitions and general corporate expenses.

No posts to display