At the beginning of this chapter, you read about Fogo de Chão and how the restaurant chain has grown from a single location in Brazil to an international operation. Using the information presented in this chapter, you should be able to answer the following questions:

If you’ve flown lately, you may be familiar with the in-flight Internet service Gogo. The company’s roots go back to 1991, when the company, then called Aircell, developed technology for in-flight phone services. In 2006, the company made a major change in strategy when it secured a 10-year license through the Federal Communications Commission for in-flight Internet services. Industry leaders, including Virgin America, Delta, United, and Frontier, have been offering Gogo in-flight services since 2008. Southwest is the only major airline in the United States not aligned with Gogo, having signed an agreement with a competitor, Row 44.¹⁹

Gogo realized that international expansion is critical to its long-term plan. Though it can achieve greater saturation of the domestic market by having its equipment installed on more planes, international expansion is the key to turning a profit. The company has begun this effort, signing an agreement with Delta to install its equipment on all 170 planes in Delta’s international fleet.

To raise the money needed for a major expansion, Gogo raised $187 million in a June 2013 IPO, underwritten by Wall Street heavy hitters such as Morgan Stanley, JPMorgan, and UBS, hitting the market at $17 per share.²⁰ The price of the stock fell quickly over the following months, bottoming out at just over $10, but then recovered and hit a high of almost $33 in December. Since then, the stock has steadily declined, but it seems to have hit a floor of about $10.

The enormous technology and operating costs associated with expanding its network have resulted in losses each year and a weak December 31, 2016, balance sheet, with liabilities in excess of assets, $800 million in long-term debt, and a negative equity balance, despite almost $880 million in capital invested. Most of the company’s common and preferred stock is still held by company executives and a number of mutual funds and venture capital firms.²¹

The company has made a major investment in improving the speed of its service with the Gogo 2Ku systems installed in 2016. As Gogo moves to penetrate the international market and increase access and speed, investors in Gogo stock could see a huge return on investment. However, there’s certainly considerable uncertainty about the future and only time will tell if this risky investment will pay off.²²