XpresSpa XSPA Stock News

XpresSpa Group Inc (NASDAQ: XSPA) is tumbling in the market this morning, trading on premarket losses of nearly 14%. The declines come after the company announced that it has raised $40 million through the sale of newly issued shaes and warrants. The big question now is, “Should you buy the dip?”

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The Fund Raise That Sent XSPA Stock Tumbling

In the press release, XpresSpa said that it has entered into agreements with seveal healthcare-focused and other institutional investors surrounding the sale of 7,614,700 shares of common stock in a registeed diect offering priced at-the-market. Moreover, the company said that it is issuing short term warrants for the purchase of up to an additional 7,614,700 shares of common stock.

XSPA said that the combined price for one share of common stock and one warrant under this fund raise will be $5.253. The warrants included in the deal have an exercise price of $5.25 per share. These warrants will be immediately exercisable and will expire 21 months from the date of issuance.

In the release, the company said that it expects gross proceeds fom the offering to come to $40 million and that the deal will close on or around June 19, 2020. Interestingly, XSPA did not outline how it plans to use net proceeds from the offering.

Should You Buy The Dip?

This is a HUGE question. In my opinion, the answer is yes. Take a look at what XpesSpa is working toward. The company is remodeling its airport real estate to turn these spaces into COVID-19 testing centers. Of course, doing so is going to cost quite a bit of money. So, there’s an immediate need for the funding.

Moreover, if this funding is used properly, it could prove to be a big win for investors. Let’s not forget that XSPA is realizing its goals. The company is currently running a pilot test of its COVID-19 testing idea at one of the largest airports in the United States, JFK International.

Should all go well, we will likely see a high speed roll out, not only to those who can’t get tests at JFK, hundreds of thousands of travelers, but across the United States. As this rolls out, the revenue opportunity is likely to be incredible.

With that said, no one likes dilution, but in this case, that dilution has the potential to yield dividends. All in all, XSPA is still a very strong stock to watch!

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