I’m going to start off with the obvious: XpresSpa Group (NASDAQ:XSPA) has incurred a torrid performance over the roughly half-year period. Since closing at a high of $7.11 on June 5, XSPA stock tumbled nearly 80% at time of writing.
True, taking a wager on the company was always a speculative affair. Unfortunately, that’s little comfort to those who were levered substantially to shares. But let’s take a step back for a moment. Where the bulls and bears can agree on is that XpresSpa’s pivot to novel coronavirus testing facilities at major airports was an admirable one.
Look, the reality is that management could have just called it a day. No one was going to advantage XpresSpa’s health and wellness centers in large part because very few were flying during the pandemic’s initial onslaught.
However, the other reality was that the broader transportation industry couldn’t just die. Yes, teleconferencing platforms, the most popular being Zoom Video Communications (NASDAQ:ZM), enabled work- and learn-from-home protocols. But in-person interactions remain a pivotal component of the educational and professional sectors. And that’s where XSPA stock earned its fundamental bullish narrative.
This isn’t just lip service to a speculative organization with a rabid following. According to the Wall Street Journal, some companies are losing productivity due to cumbersome nature of training people online for certain occupations. Further, some schools are basically reporting that learning from home has been a disaster due to an alarming number of students posting failing grades.
Therefore, XSPA stock remains relevant despite its technical hemorrhaging. As our own Louis Navellier stated, XpresSpa “deserves” to be higher. In order to move the transportation industry forward, we need a robust testing facility. It’s one thing to say that you’ve been vaccinated against Covid-19; it’s quite another to prove it.
The Speculative Case for XSPA Stock Remains Intact
But the rub of course is the vaccination development. As you know, Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) positively shocked the world with incredibly encouraging efficacy results from their messenger-RNA-based vaccines. However, this good news was bad news for XSPA stock as it implied a quicker-than-expected return to normal.
Adding more salt to XpresSpa’s wounds, the Food and Drug Administration granted an emergency use authorization to Pfizer. The latest reports indicate that Moderna will also receive such authorization, perhaps as early as Friday. Again, this is a net negative for XSPA stock in that it implies more people will have access to this long-term solution.
However, we should remind ourselves that not everyone is eager to be vaccinated against Covid-19. For one thing, you have many people who believe that the coronavirus is a hoax, and that the vaccine is an effort by Bill Gates to depopulate the earth, or whatever is the latest conspiracy theory.
Based on information compiled by FiveThirtyEight.com, more Democrats are willing to take the vaccine than Republicans, 75% to 50%. Because of significant resistance by large population sets, the government may need a way to certify who’s vaccinated and who isn’t.
This brings up two major problems. First, I fundamentally disagree that the U.S. government should force vaccinations at the threat of shunning (i.e. no or limited access to public events, facilities and transportation). Second, coerced immunization may create a black market for fake vaccine certificates.
Don’t believe me? According to the World Health Organization, fake immunization travel certificates have been a problem in African countries well before the Covid-19 crisis. I don’t think it’s a stretch to assume that those disconnected to reality will find some way to subvert a certification system.
But even taking this argument aside, what if the potency of the immunization protocol failed for whatever reason? Airliners and government agencies have every incentive to make sure, which is why XSPA stock is still relevant.
Only for the Risk Tolerant
That said, I’m not blind to the heavy risk associated with XpresSpa. Certainly, bulls and bears can also agree that the latter has control of this market. Thus, XSPA has the classic profile of a falling knife. You can be well rewarded if you catch it right. If you catch it wrong, though, you’re looking at some pain.
Nevertheless, if I may, what intrigues me is that XSPA stock appears to have stabilized since early December. At its present trading range, it’s sitting on a point of support and resistance.
This level acted as resistance as XpresSpa attempted to break out higher following the March doldrums. Now, it’s acting as support as XSPA has basically come full circle.
Could there be another meteoric run in the shares? I don’t think you can discount it, given the relevant fundamentals I mentioned above. But if you do bet, do so carefully and soberly. Further volatility also isn’t out of the question.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.