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14 minutes ago, At Sea At Peace said:

 

That's probably why I indicated that "IMO the best financially prepared of the big 3" and did not proffer such as a guarantee of future success.  😉

 

Also, such presentation was focused on the debt value (price) declines in 5 1/2 months, indicative of significantly increase risk assessment (of the financial experts in the OP in response quote) and supposition that such on debt is likely a better indicator than a focus on equity.  Of further note, the MKT CAP of the big three (i.e., equity valuation) is but a fragment of both their historical amounts and in relation to their current debt load (i.e., following debt is heavily weighted).  🤨

 

 

So I shouldn't buy at $25 and sell at $55? (Not an expert of any sort; just a cruiser.)

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Posted (edited)

Back in 2020 I kicked myself for not buying 100 shares RCCL stock at $35. With back in the same range I bought 100 shares today. I think it will go up pretty quick and if I can get the cabin credits on cruises that is a bonus.   Royal is running with pretty full cruises this summer and should start showing some quarterly profits.   

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37 minutes ago, volk904 said:

Back in 2020 I kicked myself for not buying 100 shares RCCL stock at $35. With back in the same range I bought 100 shares today. I think it will go up pretty quick and if I can get the cabin credits on cruises that is a bonus.   Royal is running with pretty full cruises this summer and should start showing some quarterly profits.   

 

Don't feel bad. In 2009 I had just opened my stock account. We had been sailing Royal for over 10 years and watched the stock drop from mid $30's to mid $5's. As it rose to mid $7's I suggested to my wife we buy it. We had hit Diamond and the share holder discount wasn't combinable with the balcony discount so she said no. As the good dutiful husband I did not but I also remind her every time she's skeptical about a stock purchase. It's like having a trump card. 😆

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2 hours ago, volk904 said:

Back in 2020 I kicked myself for not buying 100 shares RCCL stock at $35. With back in the same range I bought 100 shares today. I think it will go up pretty quick and if I can get the cabin credits on cruises that is a bonus.   Royal is running with pretty full cruises this summer and should start showing some quarterly profits.   

Take a look at the current economy, inflation, gas prices, supply chain issues, etc. Cruising is considered discretionary spending which is money spent on nonessential items. When things get tight these items are the first things to go. 

Also, it’s been common knowledge, for quite awhile that ships are filling up fairly fast now, yet the current stock price is down almost 55% ytd, and almost $100 below it’s all time high. 

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11 hours ago, Big_G said:

As the good dutiful husband I did not but I also remind her every time she's skeptical about a stock purchase. It's like having a trump card. 😆

In reverse where my wife told me to buy Google early on and I didn't.  She plays that card all the time....

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Keep an eye on CCL tomorrow.  Earnings release pre-market followed by analyst call at 10am (live-stream available on their web site).  What they have to say about bookings, pricing, staffing, etc will impact other cruise stocks.  One difference is CCL historically has not hedged their fuel needs while RCL typically hedges 50% of current year and 25% of following year.  

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On 6/22/2022 at 6:24 PM, fredmdcruisers said:

So I shouldn't buy at $25 and sell at $55? (Not an expert of any sort; just a cruiser.)

 

Well, since both are hypotheticals steeped in confirmation bias, i.e., an imaginary scenario, then sure.  I don't know how you can actually predict that you can buy RCL at $25 or equally that RCL will actually rise to $55.  But hey, the experts can't either.

 

The core of the post (not substantively debated or discussed in the one liners) was that looking at the "debt-side" price and yield changes in just the past 6 months and the relative size of "debt to equity" (either stockholder's equity or MKT CAP), and that change since pre-pandemic, highlights that "debt" is massively more weighted than equity (a big change from pre-pandemic) and information about the changes in the values (sales, trades data) give more appropriate reference to analysis of the financial investors in the market.

 

The "debt market" has totally upended the "equity market" in valuation (see BELOW).

 

image.jpeg.11a6636af05d11409dc0b0efd742aef9.jpeg

 

Again, the point was that the debt market has been very, very negative in the past six months (citing one as an example).

 

 

image.thumb.jpeg.02e612d6ea8d8f924e7ac7c147a0fb0f.jpeg

 

 

 

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4 hours ago, At Sea At Peace said:

 

Well, since both are hypotheticals steeped in confirmation bias, i.e., an imaginary scenario, then sure.  I don't know how you can actually predict that you can buy RCL at $25 or equally that RCL will actually rise to $55.  But hey, the experts can't either.

 

The core of the post (not substantively debated or discussed in the one liners) was that looking at the "debt-side" price and yield changes in just the past 6 months and the relative size of "debt to equity" (either stockholder's equity or MKT CAP), and that change since pre-pandemic, highlights that "debt" is massively more weighted than equity (a big change from pre-pandemic) and information about the changes in the values (sales, trades data) give more appropriate reference to analysis of the financial investors in the market.

 

The "debt market" has totally upended the "equity market" in valuation (see BELOW).

 

image.jpeg.11a6636af05d11409dc0b0efd742aef9.jpeg

 

Again, the point was that the debt market has been very, very negative in the past six months (citing one as an example).

 

 

image.thumb.jpeg.02e612d6ea8d8f924e7ac7c147a0fb0f.jpeg

 

 

 

Lost me... but I think you said not as good a value as pre-pandemic.

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23 hours ago, Baron Barracuda said:

Keep an eye on CCL tomorrow.  Earnings release pre-market followed by analyst call at 10am (live-stream available on their web site).  What they have to say about bookings, pricing, staffing, etc will impact other cruise stocks.  One difference is CCL historically has not hedged their fuel needs while RCL typically hedges 50% of current year and 25% of following year.  

 

CCL released with the opening bell (which was a bit odd).

 

Financials worse than anticipated. They lost another 1.9 Billion dollars last quarter. Occupancy rates were only 69%. Debt is now 35Billion and climbing. With all that said, customer deposits were up, and I suspect that is the reason the market has reacted positively today for all 3 majors.

 

 

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37 minutes ago, BermudaBound2014 said:

 

CCL released with the opening bell (which was a bit odd).

 

Financials worse than anticipated. They lost another 1.9 Billion dollars last quarter. Occupancy rates were only 69%. Debt is now 35Billion and climbing. With all that said, customer deposits were up, and I suspect that is the reason the market has reacted positively today for all 3 majors.

 

 

Believe the positive stock reaction (aside from the overall market being up big) is aside from a miss on earnings there were no negative surprises.  During the quarter hey turned cash flow positive and their liquidity position appears stable.  Most of fleet is back in service and will soon be operating with yields above 100%.  Bookings solid and making progress on staffing issue.  Expect to be slightly in the black next quarter on an EBITDA basis.

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1 hour ago, Baron Barracuda said:

Believe the positive stock reaction (aside from the overall market being up big) is aside from a miss on earnings there were no negative surprises.  During the quarter hey turned cash flow positive and their liquidity position appears stable.  Most of fleet is back in service and will soon be operating with yields above 100%.  Bookings solid and making progress on staffing issue.  Expect to be slightly in the black next quarter on an EBITDA basis.

 

With only 69% average occupancy, I'm of the belief that yields over 100% won't happen anytime soon. 

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3 hours ago, BermudaBound2014 said:

 

CCL released with the opening bell (which was a bit odd).

 

Financials worse than anticipated.

 

 

Yep, but less worse than previous anticipated is a 'traders celebration for sure.  🙄

 

3 hours ago, BermudaBound2014 said:

They lost another 1.9 Billion dollars last quarter. 

 

 

Oh why look at the hard data.  Losing almost $2B in the quarter is GOOD NEWS.  😄😂  As they sing at Fenway Park, "so good, so good, so good."  Lots of trades today 'short.  😲  On a major UP day.

 

3 hours ago, BermudaBound2014 said:

Debt is now 35Billion and climbing. With all that said, customer deposits were up, and I suspect that is the reason the market has reacted positively today for all 3 majors.

 

 

The debt issuances didn't increase today as the equity.  Hummm.

 

 

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On 6/22/2022 at 5:24 PM, At Sea At Peace said:

 

IMO, we are past the point of looking at equity (i.e., stock PPS) as the indicator of what financial experts think.  Taking a look at the debt since 12/31/2021 to today 6/22/2022 there is a stunning reduction in bond prices from face (inversely an increase in the yield over stated rates).

 

Here is one of RCL's bonds as an example of the above.

 

Again, looking to the debt, which is the first in line at the creditors table, speaks volumes in the confidence level in RCL (IMO the best financially prepared of the big 3).

 

image.thumb.jpeg.8d2aa7ee8ca391ce5a3f0f853d166ce2.jpeg

 

image.thumb.jpeg.915c01e6ebd1813a32fbd723348b9473.jpeg

Those are two ugly charts! Back in the day Michael Milken would be hawking this one big time.

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14 hours ago, DirtyDawg said:

Those are two ugly charts! Back in the day Michael Milken would be hawking this one big time.

 

Yep.  There are a lot of bond issuances by the big three, with a complex web of collateral (direct or indirect).  We're big, pro-cruising and believe beautiful ships will always sail.  However, the cruise industry (all including the big 3 publics) had an enormous rise in passengers pre-pandemic for a decade.  Accordingly, they all added ships, ordered newer ships, ordered newer powered ships, expanded private islands and port assistance projects.

 

So, post-pandemic, how long will it take for the linear projection of the passenger growth that was expected and the basis for the tens of billions of pre-pandemic expansions (above), to get to the level that can (1) support the capacity they expected and (2) recoup a level of profitability to get the debt to equity ratio back to where it was during their extremely profitable years?

 

My focus on debt is the belief that the real money (the debt holders) has already realized that such isn't going to be happening soon; hence the significant drop in debt trade values to face and related leaps of yields (effective interest rates derived).

 

Traders can and do make a lot of money on volatility and the prices declines and 'dead cat bounces' on the continued reporting of "losses of billions aren't that bad" and "future bookings are bright."  

 

They will have a good 2022 summer, and need it.  However, unlike restaurants and attractions in the northern states (lakes, oceans, etc.) that work to make enough during their summer 8-10 premium weeks to pay the bills upon closing after the season to get to the next year, cruise lines can't just turn off the power and lock the doors for the late Fall, Winter and Spring (and survive on a November holiday, a year end holiday week and a spring break).

 

Oh well, thanks for taking the time to look at the focus of the issue.

 

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On 6/24/2022 at 1:57 PM, BermudaBound2014 said:

 

Financials worse than anticipated. They lost another 1.9 Billion dollars last quarter. Occupancy rates were only 69%. Debt is now 35Billion and climbing. With all that said, customer deposits were up, and I suspect that is the reason the market has reacted positively today for all 3 majors.

 

 

 

Have had a bit more time taking a look at them as a reference for RCL and NCLH.

 

It is stunning what lipstick can't do.  Hopefully RCL and NCL won't have this "success" level when they next report.  😲

 

They boast* liquidity of $7.5 billion. 🤥

 

* which includes $5.1 billion (or 68%) in customer deposits.  

 

They boast* about revenues, occupancy and cruise capacity.  🤥

 

*  so, let's take a look at how operating at such "peak performance" has affected the bottom line.

 

Revenues - Passenger ticket and Onboard and other $4.024 billion 6-months ended 5/31/2022; Net Loss $3.726 billion.

 

Revenues - Passenger ticket and Onboard and other $75 million 6-months ended 5/31/2021; Net Loss $4.045 billion.

 

They increased revenues by $3.949 billion, or 52.5X (times) or 5,265% in order to reduce their comparative loss $319 million; i.e., they only improved (less loss) generating $4.024 billion in revenues compared to just $75 million.

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1 hour ago, At Sea At Peace said:

 

Have had a bit more time taking a look at them as a reference for RCL and NCLH.

 

It is stunning what lipstick can't do.  Hopefully RCL and NCL won't have this "success" level when they next report.  😲

 

They boast* liquidity of $7.5 billion. 🤥

 

* which includes $5.1 billion (or 68%) in customer deposits.  

 

They boast* about revenues, occupancy and cruise capacity.  🤥

 

*  so, let's take a look at how operating at such "peak performance" has affected the bottom line.

 

Revenues - Passenger ticket and Onboard and other $4.024 billion 6-months ended 5/31/2022; Net Loss $3.726 billion.

 

Revenues - Passenger ticket and Onboard and other $75 million 6-months ended 5/31/2021; Net Loss $4.045 billion.

 

They increased revenues by $3.949 billion, or 52.5X (times) or 5,265% in order to reduce their comparative loss $319 million; i.e., they only improved (less loss) generating $4.024 billion in revenues compared to just $75 million.

Same at Royal.  In each of the past two quarters revenue increased from basically $0 in prior year to $1B+ in current one yet bottom line showed no improvement.  Among factors, operating at reduced loads, high re-start expenses, fuel is up (only partially hedged) and interest costs are climbing.  Once upon a time Jason Liberty estimated newer / larger ships break even at 30% load and older / smaller ones at 50%.  That projection appears to have been overly optimistic.

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1 minute ago, Baron Barracuda said:

Once upon a time Jason Liberty estimated newer / larger ships break even at 30% load and older / smaller ones at 50%.  That projection appears to have been overly optimistic.

Pretty sure it wasn't detailed but I think he meant that at the ship level -lots of other expenses at the corporate level.

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1 hour ago, BermudaBound2014 said:

@At Sea At Peace How long do you give them before they have to start selling off Brands? Arnold Donald admitted it's on the table last week. 

In the past two years CCL disposed of over 20 ships.  Whether further sales could help is dependent on fair market value vs book value of ships in question and profit potential for each ship.  Doubt they want to sell their newer / larger/ more fuel efficient ones but who would want the smaller/older ones.

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23 minutes ago, Biker19 said:

Pretty sure it wasn't detailed but I think he meant that at the ship level -lots of other expenses at the corporate level.

You are correct (as usual).  Just puzzling how the past two quarters for both RCL and CCL show revenue growing from basically $0 in prior year to $1B (RCL) current year with no improvement to bottom line.  With loads over 50% ships should be modestly profitable and way ahead of last year when they sat in layup.   Must assume then that improvement from ships is being offset by higher corporate charges and restart costs.  Some is interest expense and fuel with hopefully  much of the remainder one time restart.  Next quarter will be informative with all ships back in service and operating almost full.

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27 minutes ago, exm said:

Good information guys. Great article in WSJ today: this graph says a lot:

 

image.thumb.png.f35a1763f74e31f13a228780c8528be8.png

Just for comparison, RCL's Net Debt to EBITDA toped out at 7 times in the Financial Crisis in 2009. The 2022 estimate looks like more than 3X that. CCL's ratio in 2009 was 2.7 times. The 2022 estimate is 15X that! 😵

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Morgan Stanly took an axe to CCL today, reducing price target from $13 to $7 and saying in a bearish case stock could go to $0.  Concerned about bookings and pricing in face of likely recession, high debt, and low equity.  Concerned that much of liquidity comes from customer deposits which could dry up in event of another systemic shock.  Concerned if liquidity shrinks high yield bond market might not be receptive to new cruise line debt.

 

On the other hand, Barclays today initiated coverage of CCL with an overweight rating and a $14 price target and Carnival made statement that they expect ships to sail with 110% occupancy this summer.

 

CNBC has run the MS story several times today with hosts and guests pretty much concurring  on risk industry is facing.   CCL currently trading down 14%  with NCLH  and RCL each down 10%.  

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On 6/26/2022 at 4:45 PM, exm said:

Good information guys. Great article in WSJ today: this graph says a lot:

 

image.thumb.png.f35a1763f74e31f13a228780c8528be8.png

Can you elucidate for us investing n00bs who really only a few shares for the OBC?

 

What I take from this is that all three major cruise lines took on a ton of debt in the past year to... stay afloat (sorry for the pun!). I presume that is anathema to future profits? Even though the 2023 number appears to be much smaller and more manageable? 

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