XSPA Stock: XpresSpa Climbs On United Airlines Partnership

XpresSpa Group Inc (NASDAQ: XSPA) is screaming for the top in the market this morning, and for good reason. The company announced that it has entered into a partnership with United Airlines that has the potential to generate significant revenue. 

Here’s what’s going on:

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XpresSpa Group Announces Agreement With United Airlines

Management Commentary

This Agreement Could Result in Significant Revenue

Risks to Consider Before Buying XSPA Stock

Final Thoughts

XpresSpa Group Announces Agreement With United Airlines

In the press release, XpresSpa said that its subsidiary, XpresCheck, entered into a national agreement with United Airlines. The agreement surrounds the provision of COVID-19 testing services with Newark LIberty International Airport and Denver International Airport. 

XSPA went on to explain that starting on December 21, XpresCheck will support direct flights to Hawaii, giving vacation travelers the peace of mind in feeling safe while vacationing during the COVID-19 pandemic. 

Under the agreement, XpresCheck will provide pre-travel testing with rapid molecular testing services. Passengers who test positive are informed that they will need to leave the airport and self-isolate as per CDC guidelines, along with anybody the passenger is traveling with. 

Management Commentary

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

We are very pleased to support United’s efforts to provide their customers with more testing options to meet their destination entry requirements with our easy rapid molecular testing protocol and convenient on-site testing facilities. Our partnership with United Airlines will start with select flights to Hawaii in two major hub airports and expand to additional cities as our plans continue to develop.

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

United was the first to offer a customer COVID-19 testing program and we continue to lead the way in providing greater accessibility to more testing options. Our partnership with XpresCheck represents another way we can continue to meet our customers’ needs and contribute to creating the safest travel experience possible.

This Agreement Could Result in Significant Revenue

The news issued this morning is big news for XSPA stock and everyone that owns it. The fact of the matter is that when COVID-19 led to closures, XpresSpa didn’t take it sitting down. 

Instead, it saw opportunity. 

Soon, the company announced that it would be launching in-airport COVID-19 testing services. While many said that airports would never allow this, the company proved the naysayers wrong, now operating multiple testing centers within airports across the United States. 

The announcement made by XpresSpa this morning only serves to further validate the hard work the company is doing. Under its partnership with United, the company’s airport COVID-19 testing services will expand to two new airports, offering up the opportunity for a significant expansion in revenue. 

Moreover, it validates my early opinion. 

I’ve held the belief that if things went well with the Pilot, XpresCheck would quickly spread across the country. My views have not changed! All in all, this news represents a massive opportunity. 

Risks to Consider Before Buying XSPA Stock

If you’re going to invest, you’re going to have to accept risk. Ultimately, if there’s an opportunity for gains, there’s also the potential for declines. When it comes to XSPA stock, some of the most significant risks to consider include:

  • COVID-19 Vaccines. COVID-19 vaccines are rolling out across the United States and around the world. The goal is to completely eradicate the condition. Should this be the case, there’s not going to be much need for testing and this news will be made null relatively soon. While I believe there will be need for testing for years to come, I can’t see the future and this is a very real risk worth considering. 
  • XpresSpa Makes No Money. XpresSpa does generate revenue, but it spends far more money than it brings in, meaning that it is a company that operates at a loss. Should the cash on the company’s balance sheet not be enough to hold it up until profitability is achieved, the company will likely look to capital markets for funding, leading to dilution. 
  • Penny Stock Risk. XSPA is a penny stock and comes with all the risks you would expect out of a stock within the category. The stock is known for high levels of volatility, making predicting moves difficult. Moreover, the company also lacks profitability and its business model hasn’t been fully proven, only adding to the risks.  

Final Thoughts

While XpresSpa, like any other investment, comes with its fair share of risks, I see the stock as an incredible opportunity. 

There’s something to be said about a management team that’s able to completely shift focus, turning lemons into lemonade in some of the worst times in history for businesses in its category. The company’s shift to COVID-19 testing is that type of move. 

Moreover, I expect tremendous revenue growth and profitability to be around the corner. The fact of the matter is that even with a vaccine, the fear associated with the coronavirus is here to stay. As such, the demand for testing is likely to be high for multiple years ahead, giving the company plenty of time to enjoy the fruits of its smart decision to shift focus early on. 

All in all, XSPA stock is one to watch closely!