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It's not in trouble right now.

 

The issue is the uncertainty about the length of time to when operations can resume (and how when they do start up). They have funding for a certain period but if it extends to the longer end, that is when they will be in some form of trouble. 

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Thx Yogi and Big-M. I've already posted basics like this on this thread already in previous pages. I too think they're in trouble depending on the time. I'm looking for a more technical response by the other guys that seem to have trading savvy... maybe you give me a more technical answer?

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1 hour ago, Hoopster95 said:

 

 

 

Guys, your opinions please.... is the company in trouble? Is the stock price in trouble?

Btw, I'm not buying , just curious.

Before Covid, RCL was a very well managed company doing something very few companies can do: it was both growing and making profits hand over fist. Usually even a good company can only do one or the other at a time. 
 

If cruising is back up and running in 6-12 months, RCL will be fine. If it takes 12-18 months, the company will likely go through some painful restructuring that will hurt shareholders and bond holders, but not us customers so much. 
 

The big worry is if things take many years or even never come back to where it was. What if people don’t want to cruise, ports don’t want the ships, governments start to regulate the heck out of cruising. Then the company is in heap big trouble. 

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1 hour ago, Ocean Boy said:

Stock isn't looking pretty today. Though the trend is certainly not confined to RCL.

I do not see what sort of news could possibly help the stock over the next few months.  I expect it will yo-yo around 20-30 at least until they start sailing.  That could shift to a lower range. 

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22 hours ago, Jimbo said:

How about anchoring all the ships and turn everything off and take all the crew off for 6 months?

 

 

 

Somebody might steal it. Though hiding an Oasis class ship might be tricky. 

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15 hours ago, Hoopster95 said:

Thx Yogi and Big-M. I've already posted basics like this on this thread already in previous pages. I too think they're in trouble depending on the time. I'm looking for a more technical response by the other guys that seem to have trading savvy... maybe you give me a more technical answer?

To look at how the market looks at companies and their odds of default I tend to look at the bond market.  

 

For Royal Caribbean

 

11/28/20  2.65% bonds   now trading at 16.058% YTM

11/15/22  5.25% bonds  now trading at 21.705% YTM

3/15/2028  3.7% bonds now trading at 11.517% YTM

 

For Carnival

 

10/15/20  3.95% bonds now trading at 15.901% YTM

10/01/23  7.2%  bonds now trading at 10.779%  YTM

 

These are certainly at Junk bond levels.  The only other companies whose bonds are trading near Royal's 11/15/22 value are small oil companies that are certainly at risk.

 

I would say that Royal is certainly at risk and will need to find some way to raise money in the near future, if they can.

 

CCL seems to have stabilized at some degree with their recent, very expensive, money raise.

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51 minutes ago, Blizzard54 said:

I do not see what sort of news could possibly help the stock over the next few months.  I expect it will yo-yo around 20-30 at least until they start sailing.  That could shift to a lower range. 

Technical analysis indicates that its next support levels at 22.35 and if it breaks through that the next support is all the way back to 2009 at around 10.

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1 hour ago, Blizzard54 said:

I do not see what sort of news could possibly help the stock over the next few months.  

 

At this point they need a breakthrough on the medical side.  Vaccine may be too much to hope for, but emergence of a therapeutic that keeps people from needing ventilators might help.

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In their just submitted 8k filing UAL projects 4th quarter revenues to be down 30%+ from last year.  Also Berkshire Hathaway just unloaded big chunk of Delta stock after riding it down from $60 to low $20's.  So neither UAL or Warren Buffett expect airline business to return to normal this year.  This doesn't bode well for cruise lines as airlines should recover much faster than CCL or RCL.

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9 hours ago, npcl said:

To look at how the market looks at companies and their odds of default I tend to look at the bond market.  

 

For Royal Caribbean

 

11/28/20  2.65% bonds   now trading at 16.058% YTM

11/15/22  5.25% bonds  now trading at 21.705% YTM

3/15/2028  3.7% bonds now trading at 11.517% YTM

 

For Carnival

 

10/15/20  3.95% bonds now trading at 15.901% YTM

10/01/23  7.2%  bonds now trading at 10.779%  YTM

 

These are certainly at Junk bond levels.  The only other companies whose bonds are trading near Royal's 11/15/22 value are small oil companies that are certainly at risk.

 

I would say that Royal is certainly at risk and will need to find some way to raise money in the near future, if they can.

 

CCL seems to have stabilized at some degree with their recent, very expensive, money raise.


What’s with yield on 2022 vs 2028. Call option on 2028? Market liquidity issues? Yield to worst tell different story? 2028 in more senior position?

Edited by ltlslick1
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1 hour ago, PhoenixCruiser said:

Is everyone forgetting about the time Royal's stock was down to $5

Sent from my SM-N950U using Tapatalk
 

 

That was 2009, what has that got to do with what's happening in 2020.

Did everyone forget when the stock was $135? That was in 2019, at least that is relevant to what's going on now.

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2 hours ago, grandgeezer said:

 

That was 2009, what has that got to do with what's happening in 2020.

Did everyone forget when the stock was $135? That was in 2019, at least that is relevant to what's going on now.

it was 2001 that the stock was down to $5

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59 minutes ago, Blizzard54 said:

it was 2001 that the stock was down to $5

RCL was lower in 2009 than it was in 2001 according to data I see. 
RCL low in 2001 was on 21 Sep 2001 with a low of $7.75 which adjusted for subsequent stock actions would be equivalent to $5.64 per RCL share. 
On 23 Feb 2009 RCL low was $5.50 which would adjust to $4.56. 

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15 hours ago, grandgeezer said:

 

That was 2009, what has that got to do with what's happening in 2020.

Did everyone forget when the stock was $135? That was in 2019, at least that is relevant to what's going on now.

 

Calm down

 

It means that even if the stock gets lower they have a chance to come back and thrive 

 

In My Opinion

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21 minutes ago, PhoenixCruiser said:

 

Calm down

 

It means that even if the stock gets lower they have a chance to come back and thrive 

 

In My Opinion

 

In my opinion, if it gets to $5, game's over, turn out the lights, the party's over, no more RCL.

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6 minutes ago, PhoenixCruiser said:

 

Calm down

 

It means that even if the stock gets lower they have a chance to come back and thrive 

 

In My Opinion

The difference is that in 2001 and 2009 ships never stopped sailing, RCL had cash flowing in and still made money.   Then while the cruise industry was impacted by geopolitical and economic events they were not considered a contributor to the problem and their business model remained intact.  Today without revenue their balance sheet is being drained of cash.  Meanwhile the media demonizes them as plague infested, and shows video of bodies being removed from the Zaandam.  Their business model is currently broken and it will be a long time before they can hope to recover.  You may spend the rest of your life waiting for $135.

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2 minutes ago, Baron Barracuda said:

The difference is that in 2001 and 2009 ships never stopped sailing, RCL had cash flowing in and still made money.   Then while the cruise industry was impacted by geopolitical and economic events they were not considered a contributor to the problem and their business model remained intact.  Today without revenue their balance sheet is being drained of cash.  Meanwhile the media demonizes them as plague infested, and shows video of bodies being removed from the Zaandam.  Their business model is currently broken and it will be a long time before they can hope to recover.  You may spend the rest of your life waiting for $135.

Gotta be better odds then playing the state's lottery though or a roulette wheel?

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21 minutes ago, Jimbo said:

Gotta be better odds then playing the state's lottery though or a roulette wheel?

Only thing about winning the lottery, can't go out to spend it and everywhere is closed

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Anyone who is even remotely long on this stock should consult Carnival's latest SEC filing.  RCL will be the same:

 

"We currently estimate the substantial majority of our fleet will be in prolonged ship layup.  In addition, we expect to incur ongoing selling and administrative expenses, and incremental COVID-related costs associated with sanitizing our ships and defending lawsuits, although we anticipate substantially reducing our advertising spend during 
the pause in operations. After transitioning to a prolonged pause, we anticipate estimated ongoing ship and administrative operating costs to range from $200 million to $300 million per month."

 

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2 hours ago, grandgeezer said:

 

In my opinion, if it gets to $5, game's over, turn out the lights, the party's over, no more RCL.

The stock can get to zero, RCL declare bankruptcy, and everything related to passengers be unaffected.  Not so much for shareholders which would get wiped out. 

 

The airlines have done it several times. Declare bankruptcy, issue new stock, primarily to the debt holders, while leaving the passenger deposits, credits intact.

 

The cruise lines have some debts, but lots of assets.  What they don't have is lots of cash.  So worse comes to worse they declare BK, restructure the company, terminate unfavorable contracts (probably those for the new builds) and raise cash and eliminate the debts.  Happens all the time.

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1 hour ago, npcl said:

The stock can get to zero, RCL declare bankruptcy, and everything related to passengers be unaffected.  Not so much for shareholders which would get wiped out. 

 

The airlines have done it several times. Declare bankruptcy, issue new stock, primarily to the debt holders, while leaving the passenger deposits, credits intact.

 

The cruise lines have some debts, but lots of assets.  What they don't have is lots of cash.  So worse comes to worse they declare BK, restructure the company, terminate unfavorable contracts (probably those for the new builds) and raise cash and eliminate the debts.  Happens all the time.


In today’s situation, their main assists are the ships, and they are worth pennies on the dollar to a lender. If they got to this stage, that means they defaulted on their previous loans. Who in their right mind would lend them money? What would they do with them in case of a default? Any body that would have any use for them are probably bankrupt themselves or close to it. So the lender is stuck, probably for years with a white elephant. Where do you park it? What about the upkeep, It’s not like a car, just pull it in the garage and forget about it.

Even if they did as you say, it’s no guarantee it will be successful, because of the size.

The company I worked for, before I retired, went through exactly what you implied. They were shutdown for nine months before restarting. Four years later the are up to 360 full time employees, down from 840 before. Their customers moved on and never came back

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1 hour ago, grandgeezer said:


In today’s situation, their main assists are the ships, and they are worth pennies on the dollar to a lender. If they got to this stage, that means they defaulted on their previous loans. Who in their right mind would lend them money? What would they do with them in case of a default? Any body that would have any use for them are probably bankrupt themselves or close to it. So the lender is stuck, probably for years with a white elephant. Where do you park it? What about the upkeep, It’s not like a car, just pull it in the garage and forget about it.

Even if they did as you say, it’s no guarantee it will be successful, because of the size.

The company I worked for, before I retired, went through exactly what you implied. They were shutdown for nine months before restarting. Four years later the are up to 360 full time employees, down from 840 before. Their customers moved on and never came back

Look at the airline bankruptcies and you would get an idea.  The restructuring process does not stop operations, if they were running.  In a restructuring the stockholders are wiped and what you usually get is often debtor in possession.  When those that have already loaned money to the company get equity in in exchange for their bonds.  Additional stock is issued to provide the funds to provide the necessary operating funds for the company to get through and restart.  As part of this process they can also get rid of any contracts that are not helpful.  They could for example eliminate the new build contracts.  They could also use the restructuring to right size the company for what they expect to see when cruising starts up again.

 

You would not see anyone take ships, they would go for the entire enterprise.  Another possibility would be a investment firm like Apollo who could step in very cheaply, take the entire company private, This is similar to what happened to NCL a few years ago. Apollo is the company that did it with NCL.

 

If the company you worked for was shut down for nine months it was most likely not a financial restructuring, but instead a full BK where someone bought the assets of the company out of BK. No need to shutdown operations in a financial restructuring.

Edited by npcl
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