Cruise Lines - End of Covid Per CDC

CCL RCL NCLH

Came across this article today - And it was of interest since I am currently Wheeling CCL, (from @thots_and_prayers suggestion) and noticed a definite climb. I think we might have a few people mixed into the cruise lines. While this article declares the CDC announcement is the direct correlation - the market overall also jumped quite a bit.

Will the Cruise line stocks still heavily beat down from Covid - sustain if the overall market drops or are they now moving in tandem? - Just thought I would attempt to start the discussion.

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This news would logically send the cruise lines back to what I would imagine would be pre-covid levels, which in CCL’s case is something like $50 a share. It’s currently a fifth of that value.

However, this is all dampened by current high inflation, costs of oil, costs of travel, etc. I don’t think we’ll rocket up from here, as they’ve survived one global crises and have found themselves in another that will keep people off boats.

I think it’s bullish news, absolutely, but the gains may be lower because of other current events, basically.

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I keep a decent eye on CCL during the day, but also try to spot check the rest of the cruise lines & airlines.

Yes they are severely beaten down from COVID, however there are numerous factors that have to happen before I’m really bullish on them.

Fuel & food costs are huge expenses for them. Likewise I’ve read they are having trouble hiring enough staff. In order to be profitable they also need full bookings on the cruises, and that’s when fuel was much cheaper than today’s rates!

With high inflation and possible recession, I think they are going to have a hard time getting people to spend the money, especially with the summer season half-over… People usually book these things pretty far in advance.

The Jan 2024 calls are not that pricy when you consider how much time you are getting and what the expected price of the stock would be then once the economy recovers. I had one but sold it for profit, I figured we’ve still got some downside left in the market before I re-enter and hold long term.

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Carnival Corporation announced that it has commenced an underwritten public offering of $1,000,000,000 of shares of common stock of the company. according to a press release.

Carnival said in a statement it intends to grant the underwriter a 30-day option to purchase up to $150,000,000 of additional shares of common stock of the company. The company expects to use the net proceeds from the offering for general corporate purposes, which could include addressing 2023 debt maturities.

Goldman Sachs & Co. LLC is acting as sole bookrunner and underwriter for the proposed public offering.

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I actually like Carnival, little like the walmart of the cruise industry but I think they are fun and offer pretty good value. The reason I have been playing the downside with CCL is mainly due to thier financials. I believe this year they did have significant demand waiting for them with covid easing, but even with the extreme demand they are nowhere near 2019 levels.

They have burned 19 Billion dollars since covid started. Debt continues to climb and cash flow right now is still negative for the 10th Quarter in a row. They need every ship at capacity with people spending money onboard. Cruise fares pay the expenses while onboard purchases and experiences generate the profit, so if a ship isnt full, most likely it will not make money.

I dont think demand will stay elevated long enough for them to continue to operate in the same way they did pre covid. Imo prices need to come up, they cant do anything more about expenses, most of their labor is already cheap from all over the world and they are at the mercy of whatever fuel and food prices are at, both big expenses in the cruise world and absolutely destroying Carnival’s income statement. Imo Carnival is going to have a hard time raising prices as their business model is based on highly attractive cruise rates to drive capacity. CCL has already been beat down pretty good YTD but I think there is more downside as a turnaround is going to be quite challenging going forward for this brand new CEO.

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