XpresSpa Group (XSPA) Stock: Will It Ever Come Back To Life?

XpresSpa XSPA Stock News

XpresSpa Group Inc (NASDAQ: XSPA) hasn’t been having the best of times as of late. The stock reached highs in June, trading at $7.11 per share on June 5th. Today, it’s trading around $1.80 and many are wondering if the stock will ever come back to life. In my view, the answer is a resounding YES. Here’s why:

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XSPA Stock Will Benefit Long-Term From COVID-19 Work

Shortly after the United States economy began to shut down early this year, many companies sat and waited; XpresSpa was not one of these companies. Instead of rolling over and saying, “We’ll wait for this storm to pass and hope we make it through,” the company jumped into action to create a plan that turned lemons into lemonade.

The company owns quite a bit of real estate in some of the largest airports in the United States. So, rather than shutting their doors and going home, XSPA created a plan to build COVID-19 testing centers in these overwhelmingly popular travel hubs.

At the time, there were plenty of people that said the company would never succeed, airport executives would never allow a testing facility to go up in their airports, XSPA was making a big mistake. Well, they are wrong.

Shortly after the plan was announced, the company announced that it had signed an agreement to launch a pilot program at one of the most active airports in the country, JFK International. That pilot is still running as we speak.

Shortly after JFK, the company announced that it would launch yet another pilot in Newark International airport, yet another massive American travel hub. So, with these two massive travel hubs already on board, the idea that no airport would allow this type of service is proven wrong!

The fact of the matter is that the plan to put testing centers into airports is welcomed. Think about it from the airport’s point of view. The majority of retailers that rent space in the airport are likely missing bills. Consumers aren’t traveling nearly as much. Money just isn’t flowing like it used to.

Being an airport executive, if one of your tenants said, “I can help keep your patrons safe while making money to pay you the rent I owe you,” does “no, that doesn’t sound good” sound like a response you would have to the plan? Of course not. The fact of the matter is that in-airport testing centers are a win/win for all, which is likely why JFK and Newark have already jumped on board.

There’s another argument suggesting that COVID-19 won’t be around long enough to make money off of this plan. That’s not the case.

The fact of the matter is that COVID-19 is caued by a coronavirus, the same type of virus that causes the common cold. If vaccination was easy, it would have been done with the common cold years ago. Moreover, the common cold taught us that immunity only lasts for a short few years at best after you get the cold, that’s the same timeframe expected from vaccines.

As such, COVID-19 is likely to become a long-term issue with an annual cycle, just like the cold or the flu. Considering the devastation that has taken place as a result of the virus, consumers are going to want testing for some time to come, and adding testing to airports to ensure safety in travel is a huge plus, making XSPA a huge opportunity.

A Big Recent Announcement Changes The Game

Previously, XpresSpa’s testing took a couple of days to yield results. However, this has changed and will likely change the game for the company. Under an agreement with Abbott, XSPA will be able to offer a testing solution that provides results in 15 minutes or less.

That means that travelers will know if they have COVID-19 before boarding their flights, adding yet another line of defense against the spread of the virus.

The Bottom Line

While XSPA has taken some heat for its in-airport testing idea from the naysayers, the company turned lemons into lemonade, and created what I believe will be a long-term revenue driver in the process.

The bottom line is simple. XSPA stock is undervalued. At the same time, it is bringing testing to a population of consumers that are looking for solutions, helping to make air travel safe again, and setting the stage for long-term revenues after a devastating illness threatened the company’s future. With recent declines, there’s a discount on this opportunity that simply shouldn’t be ignored.

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