Gogo (NASDAQ:GOGO) has gotten absolutely pulverized over the past year. From a high of $14 per share last September, investors have dumped GOGO stock all the way down into the high $3s today. Even at this huge discount, however, GOGO stock is far from an attractive bet.

Facing heavy losses, the company has tried to pivot in 2018. Gogo has brought in new management and has totally overhauled its business plan. But given the company’s difficult financial situation, can it avoid a wipeout for GOGO stockholders?

Why Gogo Has Plummeted This Past Year

Gogo’s present problems are the result of years of mounting tension. The company’s original method for delivering in-flight internet simply didn’t have enough bandwidth. Consumers didn’t get a good internet experience in the air, and the company was plagued with poor reviews.

This left Gogo in a difficult situation. The company had gone hundreds of millions of dollars into debt to build out its air-to-ground internet service. But the service reached bandwidth capacity at a point well below delivering sufficient connectivity to generate an operating profit. Remarkably, Gogo ran its then-monopoly network at capacity while generating sizable losses.

More recently, Gogo has had to move away from the air-to-ground system and use satellite connectivity to deliver a superior customer experience. But that added more costs to the equation, exposed the company to more competition, and left it with tons of debt for its air-to-ground system that couldn’t be operated profitably.

Now Gogo faces major debt maturities in 2020 and 2022, and will do so with a dreadful balance sheet. The company has negative book value, meaning that its liabilities outnumber its assets. In addition, it’s not operating profitably. This is a crisis for Gogo. It needs to improve its profitability, fast, before creditors come calling.

Northland Capital Pulls No Punches

Paul Penney of Northland Capital made some unusually frank comments about Gogo’s situation in recent days. Normally analysts tend to take an optimistic view of the future. Even if a company is struggling, an analyst tries to take a neutral tone, since speaking too bearishly tends to antagonize management and risk future deal flow and communication.

Mr. Penney, however, does not appear to worried about normal analyst restraint. He let loose on Gogo’s new strategic plan on Friday, saying: “We’ve seen this movie before with enticing the street with impressive out year EBITDA growth targets.” That is to say that while Gogo is struggling now, management suggests that things will be better much farther out in the future. Unfortunately, Gogo has offered similar positive guidance in the past, but been unable to deliver on expectations.

Penney didn’t stop there. He offered significantly lower revenue guidance of $848 million, compared to the company’s midpoint estimate of $900 million. Given that guidance, he suggested that GOGO stock had “minimal equity value left.”

On Monday, the Northland Capital analyst took things even further. Penney gave a critical view of the company’s situation, saying that: “GOGO is an open-heart surgery patient that requires more than a Band-Aid to reverse their deep-rooted … woes.” Penney added that management’s discussion on last week’s business strategy call resembled a “Fred Astaire tap-dance impersonation.” Not impressed, he suggested that the company needs to raise capital immediately to avoid a potential growing concern warning, due to its weak capital position.

Northland Isn’t the Only Skeptic

While Penney’s comments are unusually direct, he’s far from the only analyst nervous about Gogo’s future. Earlier this month, the folks at Guggenheim cut their estimates for Gogo’s financial results, causing a drop in GOGO stock.

At the end of May, Morgan Stanley’s analyst, Simon Flannery, raised similar concerns to Penney about Gogo. Flannery cut his price target for GOGO stock from $7 to $3 — a massive haircut — suggesting that Gogo faced a troubling capital situation.

Flannery said that the new CEO might not be able to overcome Gogo’s problems. In particular, the transition from selling service to individual passengers to now selling to airlines might prove more challenging than Gogo anticipates. Add it all up, and analysts have been rightly skeptical of Gogo’s chances throughout 2018.

Does GOGO Stock Have a Long-Term Future?

Gogo faces a good deal of competition today from the likes of Global Eagle Entertainment (NASDAQ:ENT). Northland Capital, for example, which has been bearish (and correct) on GOGO stock sees Global Eagle as a much stronger player in the space. And a lot more competition is coming.

In the past, Gogo appeared to have a competitive edge by using internet coming from the ground. In switching to a satellite-based  solution, Gogo has lost much of its unique edge. Now it is forced to potentially compete directly with actual satellite owners. There’s no need for a middleman like Gogo to take a piece of the revenue stream.

Already ViaSat (NASDAQ:VSAT) realized this and started offering internet services directly to the airlines. ViaSat scored a big contract with United Continental (NYSE:UAL) to service hundreds of planes. As ViaSat prepares to put far more satellite capacity in the skies, it will offer an increasing challenge to Gogo. Also, Gogo’s internet solutions have weighed less and caused less wind resistance for airplanes, saving the airlines money compared to the competition. However, the miniaturization of antenna and in-flight equipment is lessening Gogo’s competitive advantage on that front.

GOGO Stock: A High Risk Play

Ideally, Gogo’s next generation of air-to-ground technology will give the company a lasting edge over the satellite competitors. And Gogo’s new business plan of offering service to the airlines directly, rather than to airline passengers, may result in more stable operations going forward.

You’d have to have a lot of faith in Gogo’s management team to buy GOGO stock here though. The company has a negative net worth and is continuing to lose money. The clock is ticking very quickly with large chunks of the company’s debts coming due within the next four years.

The company’s fans can criticize Northland’s Paul Penney all they want for being negative on GOGO stock. But so far, his bearishness has been on the money. Gogo is continuing to burn through capital and its competitive edge is fading. It’s hard to see how the company can continue operating without raising substantial new capital. If it does so, it’d likely come with a large dilutive effect on the price of GOGO stock. For now, even after a huge drop, Gogo still has more turbulence ahead.

At the time of this writing, the author held no positions in any of the aforementioned securities.