XSPA Stock: XpresSpa Climbs as XpresCheck Expands

XpresSpa Group Inc (NASDAQ: XSPA) is screaming for the top in the market this morning, and for good reason. The company announced that it plans on opening new XpresCheck facilities, offering more opportunities for in-airport COVID-19 testing. Here’s what’s going on:

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XpresSpa Announces XpresCheck Expansion

As mentioned above, XpresSpa announced that it will be launching new XpresCheck facilities in a press release this morning. In the release, the company said that it will open its first XpresCheck facility in Houston’s George Bush Intercontinental Airport and a second facility in the Newark Liberty International Airport. 

XSPA went on to explain that it will begin building a pop-up facility in the George Bush Intercontinental Airport within United Terminal E. That construction will start this week. 

The pop-up facility will host four testing rooms with an anticipated capacity of 300 tests per day. At the facility, XSPA said it will offer the Rapid Molecular COVID-19 test as well as the Polymerase Chain Reaction test. It is expected that this facility will be open for business in early March. 

Moreover, the company already started building a new pop-up facility in the Newark Liberty International Airport within Terminal C. This facility is also expected to host four testing rooms and have the capacity to administer more than 300 tests per day. This facility, also featuring the rapid and PCR tests, is expected to open in mid-February. 

Management Commentary

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

We are pleased to leverage our existing relationship with United Airlines to bring new XpresCheck testing facilities to Newark and Houston. Partnering with United helps bring the convenience of on-site COVID-19 testing to passengers, whether they are traveling to a destination that requires a negative COVID-19 test for entry or they are seeking to test out of their home state-mandated quarantine. Our ability to provide trusted test results within an airport setting is providing people with an added layer of security and comfort as their demand for travel increases.

The above statement was followed up by Toby Enqvist, Chief Customer Officer at United. Here’s what he had to offer:

United is committed to offering our customers convenient testing options to help them manage their travel and assist with meeting their destination’s entry requirements. Working with XpresCheck allows us to further expand customer COVID-19 testing offerings as we lead the way in providing greater accessibility to tests to more customers at more of our hub airports.

Why Investors Are Excited

This is overwhelmingly exciting news. In mid-2020, when XpresSpa first announced that it planned on launching in-airport COVID-19 testing facilities, experts laughed. They said this move would never happen and XSPA stock was going to the ground. 

Here we are, under a year later, and the company has several in-airport COVID-19 testing facilities that are already doing well. Now, as a testament to the company’s success in the space, it’s launching two new XpresCheck testing facilities in popular United States airports. 

Moreover, reading between the lines tells us that one XpresCheck facility per airport may not be enough. Keep in mind, the company is building a SECOND facility at Newark Liberty International Airport, suggesting that demand was too great for a single facility to keep up with. 

As is usually the case, there are still the naysayers, those that say COVID-19 will be over before XSPA ever has a chance to make a penny on these facilities. 

Sure, there are vaccines hitting the market, and I’m hopeful that COVID-19 will be behind us quickly. However, with the pain felt as a result of the virus, demand for testing is likely to be strong for years to come. 

Moreover, there are large populations that refuse to be vaccinated, whether because they don’t believe in vaccines for one reason or another, or they are afraid that these COVID-19 vaccines were pushed through development too quickly, and could lead to long-term side effects that the studies would not have been long enough to show. 

As a result, as much as I would like for the virus to be a thing of the past quickly, it’s likely to stick around for some time, and demand for testing isn’t going away any time soon. As such, it’s not surprising to see that investors are excited about the potential for XSPA and its XpresCheck brand in the foreseeable future. 

Risks to Consider Before Buying XSPA Stock

If you’re investing, you’re accepting risk, it’s all part of building wealth on Wall Street. When it comes to investing in XSPA stock, the most significant risks include:

  • Speculation. I want to be clear, I’m a bull, and I believe in XpresSpa’s ability to turn XpresCheck into something overwhelmingly valuable. However at this stage in the game, there’s no telling what’s going to happen. As a result, a bet on XSPA stock is a highly speculative one that could result in significant losses. 
  • COVID-19 Could Fizzle. In a best-case-scenario, we won’t be hearing about COVID-19 within the next year. As much as I would like for this unlikely scenario to come to life, if it does, the bears will have been right and XSPA will not have had the time to turn a profit from XpresCheck, which could result in losses. 
  • Lack of Profitability. XpresSpa does generate revenue. However, that revenue doesn’t cut it when it comes to covering expenses. Unfortunately, the company operates at a loss. If it can’t reach profitability before the cash in the bank dries up, XSPA may look to raise funds through the sale of newly-issued shares, diluting value for existing investors and resulting in declines.

Final Thoughts

Maybe I just like rooting for the underdog, or maybe I’m right here. At the end of the day, even in the beginning, I loved the idea of opening in-airport COVID-19 testing facilities and I see long-term utility in the concept. 

Should this be the case, XpresCheck has the potential to be the goose that lays the golden eggs for XpresSpa and its investors in the years to come. 

While there are risks to consider, it’s hard to ignore this type of potential. All in all, if you aren’t watching XSPA closely, you’re missing out on a potentially lucrative opportunity!