Investors Must Hope the Third Time is the Charm for XpresSpa Group After two attempts at establishing itself as a health and wellness brand for the busy traveler, XpresSpa is hoping that a new subscriber-based wellnes...
This story originally appeared on MarketBeat
Shares of XpresSpa Group (NASDAQ:XSPA) stock are dropping after the company reported mixed earnings. Revenue was up significantly from the prior quarter. However, the company delivered negative four cents per share as opposed to the negative three cents per share that were forecast.
If you're a risk-averse investor, I see no reason to get involved with XSPA stock. There is still a considerable amount of short interest on the stock and that means that you could get caught in a short squeeze. But if you have a high-risk tolerance, you should read the rest of this article to see why there may be an emerging story for XpresSpa.
How XSPA Stock Got Here
For the uninitiated, let me give you a brief overview of XpresSpa Group. The company is currently comprised of two business units. The first, its namesake XpresSpa, offers "innovative premium spa services, as well as exclusive luxury travel products and accessories through partnership with some of the leading cosmetics brands in the world,"
XpresSpa stock has only been trading publicly since the end of 2017. And it's important to note that the stock was on a steady decline into penny stock territory prior to the pandemic. Much of this had to do with sluggish revenue growth and the inability of the company to turn a profit.
So when the Covid-19 pandemic hit, the company faced an existential threat, but also an opportunity. The challenge was that with airports closed, its core business had no customers. However, the company made a pivot to turn their existing facilities into Covid-19 testing sites through a new business unit, XpresCheck. The idea was to ensure that airline crews and passengers were able to get fast, convenient testing at the airport.
The service, which is staffed by state-licensed physicians and nurse practitioners, is available at eleven airports spanning thirteen of the company's locations. The company can administer a rapid molecular Covid-19 test, a Polymerase Chain Reaction (PCR) test, and a rapid PCR test.
Although the stock initially soared to over $7 a share, investor enthusiasm waned as airport traffic remained sluggish due to the second wave of the virus. By the end of the year, XSPA shares were trading hands at $1.19.
A Brief Romp With the Reddit Crowd
In early 2021, XSPA stock was one of the stocks caught up in the meme stock craze. At one point, the stock closed at $2.83. But it failed to gain traction probably because as vaccine acceptance rose there was less need for onsite airport testing.
However, in the company's earnings report I remarked that it still expects there to be demand for Covid-19 testing for the foreseeable future.
Will the Third Time Be the Charm?
On June 1, 2021, XpresSpa launched a new brand, Treat, which is being promoted as a travel health and wellness service that is "designed to deliver on-demand access to integrated healthcare through technology and personalized services."
The company just launched its mobile app for Treat which will allow subscribers to have "access to on-demand virtual care, and a travel wallet that contains access to medical records and test results, including Covid-19 vaccination records. The cost of a subscription is $200 for 3 months and $720 for 12 months. According to the company, subscribers will receive one free PCR Covid-19 test and one free flu vaccine every year.
And XpresSpa plans to open up select spa locations to become In-Airport Wellness Centers. The first such center will open at JFK International Airport sometime in the fourth quarter.
XSPA Stock Remains a High-Risk Stock
Looking over the company's financials, you can't ignore the fact that the company does offer some risk of falling into bankruptcy. But the potential for a steady revenue stream from its Treat Wellness Centers is intriguing, particularly since you don't need the stock to climb that high to reward your investment.
Right now, XSPA stock is a falling knife. But if it finds support, as it has in the past, there could be an opportunity for risk-tolerant investors.
