U.S. Markets closed
  • S&P 500

    3,426.92
    -56.89 (-1.63%)
     
  • Dow 30

    28,195.42
    -410.89 (-1.44%)
     
  • Nasdaq

    11,478.88
    -192.67 (-1.65%)
     
  • Russell 2000

    1,613.63
    -20.18 (-1.24%)
     
  • Crude Oil

    40.68
    -0.15 (-0.37%)
     
  • Gold

    1,907.00
    -4.70 (-0.25%)
     
  • Silver

    24.50
    -0.19 (-0.78%)
     
  • EUR/USD

    1.1779
    +0.0051 (+0.4358%)
     
  • 10-Yr Bond

    0.7610
    +0.0170 (+2.28%)
     
  • Vix

    29.18
    +1.77 (+6.46%)
     
  • GBP/USD

    1.2949
    +0.0040 (+0.3095%)
     
  • USD/JPY

    105.4500
    +0.0560 (+0.0531%)
     
  • BTC-USD

    11,732.40
    +675.39 (+6.11%)
     
  • CMC Crypto 200

    239.16
    +5.49 (+2.35%)
     
  • FTSE 100

    5,884.65
    -34.93 (-0.59%)
     
  • Nikkei 225

    23,671.13
    +260.50 (+1.11%)
     

What You Must Know About Boingo Wireless, Inc.'s (NASDAQ:WIFI) Beta Value

Simply Wall St
·3 mins read

If you own shares in Boingo Wireless, Inc. (NASDAQ:WIFI) then it's worth thinking about how it contributes to the volatility of your portfolio, overall. In finance, Beta is a measure of volatility. Volatility is considered to be a measure of risk in modern finance theory. Investors may think of volatility as falling into two main categories. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. The second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market.

Some stocks are more sensitive to general market forces than others. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett said 'volatility is far from synonymous with risk' in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of one. A stock with a beta greater than one is more sensitive to broader market movements than a stock with a beta of less than one.

View our latest analysis for Boingo Wireless

What we can learn from WIFI's beta value

Given this level of beta, if the future looks like the past, we could therefore consider it likely that the stock price will experience share price volatility that is roughly similar to the overall market. Share price volatility is well worth considering, but most long term investors consider the history of revenue and earnings growth to be more important. Take a look at how Boingo Wireless fares in that regard, below.

NasdaqGS:WIFI Income Statement May 1st 2020
NasdaqGS:WIFI Income Statement May 1st 2020

Does WIFI's size influence the expected beta?

Boingo Wireless is a small cap stock with a market capitalisation of US$618m. Most companies this size are actively traded.

What this means for you:

Since Boingo Wireless has a beta close to one, it will probably show a positive return when the market is moving up, based on history. If you're trying to generate better returns than the market, it would be worth thinking about other metrics such as cashflows, dividends and revenue growth might be a more useful guide to the future. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Boingo Wireless’s financial health and performance track record. I highly recommend you dive deeper by considering the following:

  1. Future Outlook: What are well-informed industry analysts predicting for WIFI’s future growth? Take a look at our free research report of analyst consensus for WIFI’s outlook.

  2. Past Track Record: Has WIFI been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of WIFI's historicals for more clarity.

  3. Other Interesting Stocks: It's worth checking to see how WIFI measures up against other companies on valuation. You could start with this free list of prospective options.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.