XpresSpa (XSPA) Stock Can Climb Far Higher

XpresSpa XSPA Stock News

XpresSpa Group Inc (NASDAQ: XSPA) has been flying as of late. Prior to the COVID-19 pandemic, the company was struggling. However, since the pandemic began, we’ve seen a tremendous run. One question on the minds of many investors is whether or not the stock has more room to run higher. In my view, the answer is yes. Here’s what’s going on:

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XSPA Stock Can Continue To Climb From Here

Over the past month or so, I’ve read several reports surrounding XpresSpa. Some of them written by bulls and some written by bears. Before we get into the debate, let’s chat quickly about why the stock is getting so much attention.

At the start of the COVID-19 pandemic led lockdowns, investors were concerned about XSPA and companies like it. Afterall, spas simply aren’t essential services. Nonetheless, the company grabbed the attention of investors when it said that it would temporarily transition its airport real estate into COVID-19 testing centers.

Of course, the idea was exciting, sending the stock for the top. However, if you’re invested in the stock, you may have some questions. Recently, there have been a few articles popping up warning investors that this may not be a great play.

The big argument is that prior to the pandemic, the company was struggling and trading with a market cap of around $50 million. However, now, the company trades with a market cap of around $200 million and many are saying its overvalued.

Why I Don’t See $200 Million As Overvalued

Overvalued is a term used to describe a stock that’s market price is higher than what the true intrinsic value of the company is. In my view, $200 million is undervalued based on the work the company has done to date.

While many said that XSPA would never be able to get its testing platform off of the ground, it has already started to do so. In fact, at JFK International airport, one of the largest airports in the country, there is a pilot test taking place.

In the piolot test, XpresCheck, the XpresSpa COVID-19 testing subsidiary, i providing up to 500 tests per day to airport workers. Should all go well, it is expected that JFK International will expand the relationship, offering testing to travelers. That’s exciting considering the fact that more than 100,000 consumers pass through JFK every single day!

However, in my view, the excitement goes further than that. Being one of the largest airports in the world, JFK is a leader in new technology in airports across the country. If it works for them, others want to jump on the bandwagon.

Considering this, if all goes well, other airports across the country will likely be in contact with XSPA to discuss testing at their locations. Ulitmately, success at JFK could prove to put a domino effect into place, leading to a rapid expansion of the company’s COVID-19 testing idea.

I don’t care how you slice it, there’s value in that!

The Bottom Line

The bottom line is that any time a stock gets hot, there will be nay sayers. However, diving into the details suggests to me that we’re far from the end of gains for XSPA. Ultimately, the could quickly become a cornerstone in COVID-19 testing for travelers, and that is overwhelmingly valuable.

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