XpresSpa (XSPA) Stock: Today’s Declines Are An Opportunity

XpresSpa XSPA Stock News

XpresSpa Group Inc (NASDAQ: XSPA) is having a rough start to the trading session this morning, and for good reason. The company reported its financial results, showing a significant drop in revenue due to COVID-19 related spa closures.

Nonetheless, the declines are likely a huge opportunity. Here’s what’s going on:

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XSPA Stock Falls On Financial Results

As mentioned above, XpresSpa issued its financial results for the second quarter, with an upsetting reaction in the market. The big issue on the company’s report was a massive reduction in revenue.

During the second quarter, the company was not operating its spa facilities due to closures of non-essential businesses. As a result, revenue for the quarter came in at $143,000 compared to $12.9 million in the second quarter of last year.

That’s a serious point of pain for XSPA. However, as mentioned above, the declines that we’re seeing on the stock likely represent an opportunity.

XpresCheck Is Exciting

While the company’s airport spas have been closed since the start of the COVID-19 pandemic, it didn’t just roll over and wait for the pandemic to be gone. Instead, XSPA came up with a plan to convert its spa locations into COVID-19 testing centers.

So far, the company has two pilot tests running at JFK International and Newark airports. Should these pilot tests go well, the company’s goal of expansion of COVID-19 testing centers in airports across the country will likely come to fruition.

In a statement, Doug Satzman, CEO at XpresSpa, had the following to offer:

Our vision for XpresCheck is taking shape and we see a significant opportunity to expand the concept across the country as we capitalize on the societal changes coming to U.S. airports as a result of COVID-19. We are now operating XpresCheck in both JFK and Newark and are in active discussions with other airports for further development. We are also lobbying our elected officials and consulting with related government agencies to support COVID-19 testing specifically at U.S. airports as part of the next stimulus bill.

While providing COVID-19 testing is a critical starting point for XpresCheck, and we are committed to offering the latest and best testing available on the market, we believe the possibilities for advancing health and wellness care within airports is much greater. In the near-term, we are looking to expand testing to other communicable diseases as well as administer vaccinations for the seasonal flu. We also see ourselves as well positioned to be part of the national rollout of a COVID-19 vaccination when it becomes available. However, our overarching and longer-term goal will be for XpresCheck to expand into health and wellness services and amplify care for airport employees and the traveling public as they pass through the largest U.S. airports.

This Could Be Huge

The fact of the matter is that COVID-19 isn’t going anywhere any time soon. Sure, we have over 100 companies working on the development of vaccines and treatments to combat the coronavirus. However, if you think that will dampen plans from XSPA to build and profit from in-airport COVID-19 testing centers, think again. There are a few things to consider here:

  • We Have Flu Vaccines. First and foremsot, we’ve had flu vaccines for quite some time now. However, the Flu still comes every year and kills tens of thousands of consumers. The fact of the matter is that a vaccine is not an end to an illness.
  • This Pandemic Shook The World. Consumers are going to feel the pain from COVID-19 for years to come, even in the off chance that the condition is irradicated. As such, there will continue to be strong demand for testing, even post pandemic.
  • Airports Are The Perfect Place For Testing. Finally, if you want to stop a pandemic from spreading, a great place to start is the source of the spreading, travel. Should consumers be tested prior to traveling, those who would have unknowingly spread the virus now have the ability to do their part to stop the pandemic.

The bottom line here is simple. XSPA and its in-airport COVID-19 testing idea, are overwhelmingly valuable. While Q2 was painful for the company, it’s efforts to bring testing to aiports is proving to be fruitful, and soon, will likely be profitable. So, today’s declines may be a discounted opportunity to get in on tremendous future growth.

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