Ticker: CCL, NCLH, RCL
Description of why you are requesting DD: Short-term bearish but long-term bullish.
Applicable links to news articles or Reddit analysis: Youtube analysis from Everything Money channel
https://www.carnivalcorp.com/news-releases/news-release-details/carnival-cruise-line-announces-adjusted-protocols-reflect
https://www.carnivalcorp.com/news-releases/news-release-details/carnival-cruise-line-says-booking-activity-nearly-doubles-2019
https://www.nasdaq.com/press-release/norwegian-cruise-line-holdings-reports-second-quarter-2022-financial-results-2022-08
I’m basing this DD request off of a Youtube analysis of CCL and NCLH. The only real applicable news is in the first few minutes, with the rest of the video just selling their software, so you can ignore everything after that.
In the video, he talks about a recent news release from CCL on July 29th, stating that the CDC is easing COVID restrictions and protocols, making it easier and safer for people to get back on ships. CCL has already run from this news a little bit, going from about $9 per share to a peak of about $11 per share just the other day.
He also goes a bit over the most recent NCLH earnings, which came out on August 9th.The earnings were worse than estimated. According to NCLH, occupancy in the second quarter was 65%, which was in line with their own expectations and +17% improvement from the quarter before.
The juicy parts from NCLH’s earnings is that they are expecting occupancy to continue going up to over 80% for the third quarter, and that they have seen +20% onboard revenue generation from their 2019 2Q levels. That’s pre-covid levels, where occupancy was higher.
Not talked about in the video is two more recent news releases from CCL stating that they have removed all pre-testing requirements and are allowing all unvaccinated travellers back on their ships. Their booking levels from this Monday, August 15, was DOUBLE that of the same day in 2019.
So in sum, the bull thesis is: occupancy is increasing, people are getting back on boats, and not only that but they are spending more on their boats. This is all bullish news and this bullish news applies to all cruise line stocks.
However, the bear thesis is that these companies are all they way up shits creek in terms of debt. They have been taking on so much debt during the pandemic, that it’ll be a long time before the debt can be really tackled.
In the video, they use their “stock analyzer tool” to predict price targets based on different future outcomes, such as revenue growth or EPS. In all cases for both CCL and NCLH, even “optimistic” outcomes, he sees a price target lower than current trading prices. However, long term, it is clear that cruises should bounce back.
Cruises are revenue generating machines, and old folks as well as families love the simplicity of these kinds of vacations. Cruises are gonna come back eventually to profitability. That’s why I see this as a short-term bearish play and a long-term bullish play.
Would love to get some bigger brains to weigh in on this one.