Even with so many businesses trying to find a unique angle on the Covid-19 testing market, XpresSpa Group (NASDAQ:XSPA) truly stands out. It’s a fascinating company and, perhaps, an even more fascinating trading vehicle as XSPA stock remains among the most contentious and divisive names in the penny-stock sphere.
How contentious is XSPA stock? Let’s just say that I didn’t make a lot of new friends when I told investors not to chase it at the current price and then suggested that traders find another place to park their investable capital.
This time around, I’m ready to take up the mantle for the XSPA stock bulls. Or at least, I won’t side with the bear camp. Does that make me a flip-flopper? Not necessarily, as circumstances change and when a stock gets beaten down far enough, it could actually be priced to perfection.
A Closer Look at XSPA Stock
More than most stocks, XSPA is a difficult one to analyze. XpresSpa’s decision to enact a one-for-three reverse split is an event that must be taken into account, of course.
What we can say with certainly, at least, is that XSPA stock has experienced a classic “pop and drop” since mid-July. Frustratingly for the bulls, XSPA shares have recently climbed from $2.70 all the way up to the $4.50 level, only to fall back to $3.09 as of Aug. 14.
With a five-year beta of 3.06, there’s no doubt that XSPA is prone to volatility. If you’re going to take a position in this stock, understand that the price action can be erratic.
Therefore, it’s best to only purchase small amounts of XSPA stock, if you’re going to buy it at all. And whatever you do, don’t try to short-sell XSPA shares. This stock is a big mover, and the price can spike quickly without warning.
Shifting and Expanding
Previously, XpresSpa focused its business activity on providing spa services at airports. To be honest, this wasn’t a massively lucrative way to make money. Furthermore, the trading community didn’t spend much time discussing XSPA stock.
That changed dramatically with the onset of Covid-19. As the demand for screening and testing increased, XpresSpa stepped up and started offering these services at airports.
In June, the company’s biggest coup was the launch of the XpresCheck Covid-19 screening and testing pilot program at JFK International Airport’s Arrivals Hall at Terminal 4. Thus, XpresSpa’s shift from spas to testing and screening was complete.
Then, on July 6, XpresSpa Group CEO Doug Satzman provided an encouraging update. Specifically, the company had raised roughly $48 million in gross proceeds since January. Even beyond that, the CEO teased that XpresSpa was “in active discussions with other U.S. airports regarding the potential roll out” of the company’s XpresCheck centers.
New Jersey, Here We Come
As XSPA stock enthusiasts probably know by now, Satzman’s vision of expansion beyond New York recently came to fruition. In an announcement on Aug. 13, XpresSpa revealed that it had “signed a contract with the Port Authority of New York and New Jersey to provide diagnostic COVID-19 testing at Newark Liberty International Airport.”
With that revelation, Satzman once again teased that XpresSpa hopes to “bring XpresCheck to additional U.S. airports over time.” It will be interesting to see if the company actually does manage to earn more partnerships with large American airports this year.
Satzman and XpresSpa’s aggressive rollout should provide some hope fuel for frustrated XSPA investors. It’s impressive that the company snagged the Newark deal so soon after the JFK announcement.
What we have, then, is a company with upward momentum and a stock that’s depressed in price. It’s this type of divergence that allows valiant traders to capitalize on what could be a mis-pricing in the market.
The Bottom Line
There’s nothing wrong with flip-flopping on a stock when the price changes and the company appears to be making significant progress. For a small position size, then, I’m prepared to recommend XSPA stock. After all, XpresSpa’s next major deal could be at an airport near you.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.