Why Global Eagle Entertainment Inc Stock Jumped Today

By Jeremy BowmanMarketsFool.com

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What happened

Shares ofGlobal Eagle Entertainment(NASDAQ: ENT) were surging today after the digital-media company extended its contract withSouthwest Airlines(NYSE: LUV). The stock closed up 10.3%.

So what

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Global Eagle specializes in providing internet connectivity for the travel industry, and Southwest is its biggest customer, contributing 23% of its revenue last year -- so an extension bodes well for Global Eagle. The companies agreed to extend their partnership from 2020 to 2025. Features include a full-term commitment to live television, transition to monthly recurring charge per aircraft for Wi-Fi and TV instead of the current fixed fee, and a significant increase in user experience and network performance.

Now what

Global Eagle stock spiked as much as 25% today, though the stock gave back some of those gains as investors seemed to think shares had been overbought. Digital connectivity for airlines is a growing field, and the extension of the Southwest agreement could help the company land additional airline clients. Global Eagle is hosting a webcast tomorrow morning at 8:30 a.m. EST to discuss the details of the agreement. The stock could move even higher depending on how management spins the news.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.