There are a lot of long/short hedge funds out there that have to short to justify their fees, they don't have a choice. Gogo is an easy target because based on today's cash flows it looks expensive. The short books at these hedge funds have been run over by this market, and Gogo will to it to them again (especially when they put out guidance next year and Ebitda will be up substantially, because then all of a sudden the stock doesn't look expensive). I've read a lot of the analyst reports on Gogo, and quite frankly I find their analysis pretty sad. Their modeling looks good, and I think they get the business model, but they all make the same mistake. They all place some multiple on next years Ebitda. By doing this, they are saying the ROW segment is worth negative $2B+ in value. This is just stupid, as it's arguable their greatest market opportunity. A better analysis would be to do a sum of the parts valuation. If they did that with BA and CA-NA, and put a value on ROW based on the market opportunity (discounted back) they would all come up with a much larger number. Lastly, their terminal multiples are way off. A business that has a long term annuity stream should get big multiples (See Sirius). At their investor day they compared themselves to Sirius, and I think that is a fair comparison. Once the equipment is on, it doesn't come off, this is a long term/high margin annuity business. Businesses like that get monster multiples.
Yeah, the next step will be the final rules. I think the legal challenges probably are pretty much done with. Other obstacles include the trade agreements with Mexico and Canada, they claim they've made progress but nobody knows that that means, might mean they need more stations along the border. I expect the rules will be more friendly to all parties, less interference (good for wireless guys) and they might get rid of the dynamic pricing model. In the fall broadcasters will have to register to participate (they all will), still some issues to work out, but looking more and more like this happens.