XpresSpa (XSPA) Stock Never Looked So Good

XpresSpa XSPA Stock News

XpresSpa Group Inc (NASDAQ: XSPA) has had a rough time over the past several trading sessions. There’s no doubt, the declines have been a painful experience for many holding the stock. Nonetheless, to me, the stock has never looked so good. In fact, I view the declines as a discounted opportunity to get in on a potentially highly lucrative play.

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XSPA Stock Offering Sends Stock Tumbling

Let’s talk about the elephant in the room. XpresSpa recently announced that it is raising $35.3 million in a dilutive offering. Now, each share owns slightly less of the company. That’s no fun. Dilution never is, but in this case it was a necessary evil, and an expected one at that.

Since the COVID-19 pandemic began, the company’s in-airport spas have seen no revenue. Revenue may stop, but bills do not. Furthermore, the company has been moving forward with an aggressive plan to put COVID-19 testing centers in large airports across the United States. That’s going to cost a chunk of change.

So, yes, the fund raise was painful, but it was necessary. Moreover, it creates opportunity.

What XSPA Is Doing With All That Money

So, XpresSpa is rasing millions of dollars. What does it plan to use it for? General working purposes and expansion of its in-airport COVID-19 testing center network.

At the moment, XSPA is running pilot programs in JFK and Newark, two of the largest international airports in the United States. However, it owns real estate in 19 major airport hubs across the United States and wants to expand its testing centers to all of them.

But, isn’t COVID-19 going away?

Well, yes and no. Case counts are falling dramatically at the moment, but the damage has been done. Moreover, there are fears that this will become a seasonal illness that vaccines will have little long-term efficacy against, much like the flu.

With the pain caused by COVID-19 and the potential for the virus to come back with a bang, consumers are going to want to stay as far away from the virus as possible for years to come. As such, demand for in-airport testing, in the humbs where the virus has the most potential to spread across the country, will likely be overwhelming.

The Company Upped It’s Game

Previously, tests at the COVID-19 testing centers ran by XpresSpa took 48 hours to produce a result. However, the company recently signed an agreement with Abbott Labs. Under the terms of the agreement, XSPA got its hands on 100 ID NOW testing instruments.

That’s overwhelmingly important as ID NOW tests produce results in under 15 minutes. That means that those going to the testing centers will have the results before they even board their flight in most cases. That’s a big deal!

The Bottom Line

The bottom line here is simple. Investors aren’t happy with the dilution of the recent offering and concerned with the company’s COVID-19 testing plans considering coming vaccines and lower case counts.

Nonetheless, demand for testing, especially in airports will likely be overwhelmingly high for years to come. The offering gave XpresSpa the money it needed in order to expand its testing center plans. That’s great news.

Now, with the reduced time frame to results, the money in hand to fund expansion, and the shoe in with 19 of the largest travel hubs in the United States, XSPA stock is one to watch closely.

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