XpresSpa (XSPA) Stock: Risky, But The Potential Is Increadible

XpresSpa Group Inc (NASDAQ: XSPA) is a risky play, there’s no doubt about it. The company’s spas were shut down across the country. As the US economy reopens, there’s a strong argument that air travel will continue to feel pain for quite some time.

For a company with a line of spas located in airports across the United States, that’s bad news. Saying that a story like this didn’t come with risk, well, that would be pretty wreckless.

However, if you’ve got the appetite for risk, the potential rewards associated with an investment in XSPA stock can be hard to ignore.

Stop wasting your time! Start finding winning trades in minutes with Trade Ideas!

XSPA And COVID-19

For those of you who haven’t followed XpresSpa, when the airport spa company was handed lemons through widespread shutdowns and the prospect of a dim future for who knows how long, it didn’t curl up and die.

XSPA faught back against the pandemic and quickly created a plan to turn all of its airport spas into COVID-19 testing centers, turning lemons into lemonade. The goal toward airport COVID-19 testing centers, operated under the XpressCheck brand, is coming to fruition.

At the moment, the company has a pilot test running in JFK International. Through the test, airport workers have access to COVID-19 testing. If all goes well, the idea will likely spread to the testing of travelers, and be picked up in other airports across the country.

Will Airports Go For It?

The answer is a resounding YES!

I’ve had a couple of people send me emails stating that XSPA is going nowhere because airports aren’t going to allow for testing center conversions. Uhem… allow me to address these folks.

Imagine you run an airport and COVID-19 strikes. OUCH. That airport is suddenly under pressure with several merchants that will soon fail to pay rent. Where does that leave you? A pretty tough spot is an understatement!

Now, imagine that one of these merchants that soon would not be able to pay rent came to you and say, “Hey buddy. I want to convert my spas into COVID-19 testing centers. It has the potential to generate meaningful revenue and protect both the workers that keep your airport running and the passengers that you serve.”

Would you even consider uttering the word no?

HECK NO! You would be jumping on the opportunity to save the revenue that you generate with that merchant while offering a safer workplace and environment for your patrons. I emplor you, both of you, that have sent me tons of emails. Put yourself in the airport’s shoes. What would you do?

But Isn’t COVID-19 Going To Be Gone Soon?

If COVID-19 is wiped out before XpressCheck has the ability to come to fruition, this entire venutre would have been a capital drain. Reports suggest that we’ll have COVID-19 vaccines by the end of the year as butterflies and rainbows emerge once again.

That’s a pretty picture, but not likely how it’s going to work. At the moment, vaccines are being pushed through the development process faster than ever before. Speed in this process is a scary notion. Speed in any medical process is dangerous.

Think about testing.

We rushed to produce massive amounts of COVID-19 tests. We are now finding that many tests were only accurate about 50% of the time. Well… so is a coin!

Even if a vaccine is approved and pushed into the market at a lightning speed, there’s no real time to see the long-term effects of that vaccine. Moreover, the pain from the COVID-19 pandemic will be felt for years to come.

The mix of speed to market of coming vaccines and consumer trauma as a result of the pandemic, demand for testing is likely to be around for some time.

The Bottom Line

Is XpresSpa in a perfect position? Far from it! Are there risks? Of course there are.

Nonetheless, the company is on the verge of spreading its COVID-19 testing through some of the most popular airports in the world. With, what I believe to be long-term testing and a vaccine that leads to more questions than answers on the horizon, XSPA is a risky play, but the potential reward here is increadible!