What is going on with Virgin Mobile?

What is going on with Virgin Mobile?

Virgin Mobile is a prepaid MVNO (mobile virtual network operator) offering a prepaid or "pay as you go" wireless service on the Sprint network. Virgin Mobile purchases the airtime minutes from Sprint and resells them as Virgin Mobile. The company has attempted to leverage the Virgin name and target younger wireless consumers. Virgin went public a few months ago but has seen its stock go down almost every day in its public life. Why? Virgin faces stiff competition from ATT and T-Mobile in the prepaid space- ATT has its GoPhone prepaid product and T-Mobile has a prepaid - postpaid hybrid product they call Flexpay which is doing very well. In addition the are strong family plan and add-a-line products available from Alltel, Verizon Wireless, Sprint, T-Mobile and ATT wireless that all offer users a better value than the prepaid model Virgin offers. Virgin has been successful in getting their product into strong retailers like Target and Best Buy and it has grown its subscriber base yet there is no clear indication that it can make real profits. Advertising costs will remain high as Virgin fights all the other wireless carriers for subscribers and the prepaid model does not work very well for data services which are a big part of the future of the industry. Virgin will have a tough time getting ahead and the stock is likely to languish in our Insider opinion.

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