Gogo Confirms 5G Network Launch, But High Leverage and Valuation Risks Persist

What happened

Gogo has announced the launch of its next-generation air-to-ground 5G network, confirming flight tests that demonstrate its efficacy, as per a press release dated December 29, 2025. This milestone addresses a critical execution risk highlighted in the DeepValue master report, which emphasized that Gogo's growth story hinges on timely delivery of 5G, Galileo, and LTE technologies. However, the report maintains a 'POTENTIAL SELL' stance, citing extreme leverage with net debt/EBITDA at ~11.6x, premium valuation metrics like a P/E of ~88x, and ongoing litigation and regulatory uncertainties. The successful 5G launch could enhance Gogo's competitive moat in North American business aviation and support future revenue growth from multi-orbit services. Nonetheless, this development does not immediately alleviate balance sheet pressures or justify the stock's current price, which trades ~65% above a conservative DCF estimate of $2.90.

Implication

Investors should note that Gogo's 5G launch, while positive, does not resolve its substantial financial vulnerabilities, including tight interest coverage of ~1.2x and net debt/EBITDA of ~11.6x, which heighten equity risk amid any operational missteps. The stock remains overvalued at a ~65% premium to intrinsic value, with limited margin of safety given ongoing litigation from SmartSky and FCC reimbursement dependencies. Monitoring should focus on post-launch metrics like aircraft activations and ARPU trends to assess if 5G can drive sustainable free cash flow growth without dilutive capital raises. Any delays in Galileo or LTE execution, or adverse legal outcomes, could quickly pressure the stock further, reinforcing the report's bearish stance. Therefore, while the launch is a step forward, investors are advised to lighten positions or avoid until clearer deleveraging and execution stability emerge.

Thesis delta

The confirmation of 5G launch marginally reduces execution risk, a key watch item in the DeepValue report, but it does not materially alter the core 'POTENTIAL SELL' thesis. High leverage, premium valuation, and persistent litigation and regulatory risks continue to skew the risk-reward profile negatively, with no significant shift in the margin of safety. Investors should await evidence of sustained free cash flow growth and deleveraging before reconsidering the stance.