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Carnival Stock Price Dropping


Daniel A
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2 minutes ago, caribill said:

 

With the majority of CCL stock held in various forms by one family, I doubt there would be a bankruptcy.

The question is if they will be able to borrow enough to get past this period.  If they run out of cash, and cannot borrow to pay their debts than it does not matter how much is owned by one family.

 

Over 9 billion in in current debt, including 4.5 billion in customer deposits for cruises not yet taken, vs 500 million in cash, 450 million in accounts receivables and trade, and a 2.8 billion untapped in a 3 billion revolving line of credit.

 

Lots of assets but pretty much all in ships and land based tourist facilities, not liquid and with the entire industry under fire not sure how much anyone would lend against them.

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15 minutes ago, frugaltravel said:

Whatever comparisons/analogies you want to make to make yourself feel good 😀😀

I suspect unlike most people here, I live totally off my investments.  Retired 7 years ago, lived and traveled quite nicely off of my portfolio without out any additional income, have grown it quite nicely even while drawing on it.

 

Currently 40% in market, rest in cash or equivalent. Have not sold anything except my cruise line stocks in this down turn, the rest is in indexes.  Totally out of cruise and travel stocks and do not see any reason to buy back into them, until one starts to see the virus dropping off world wide.  This will get worse before it gets better. I do expect that you will see failure of some smaller, weaker airlines around the world and major pressure on the finances of cruise lines

 

Will start putting some money back into indexes in a gradual way.  No real rush there either.

Edited by npcl
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19 minutes ago, RMMariner said:

You misunderstood me. I have been looking to buy back in and dollar cost average, but I would like to do it when it is not in free fall. 

 

As far as all stocks rising again. That is not a given. Carnival is highly leveraged and relies on cash flow. That is a perfect recipe for bankruptcy. I doubt it will happen, but still a slow and shaky recovery is a very strong possibility.

 

I am willing to throw enough money in to buy another couple hundred shares when the price gets low enough, but I am not near confident enough to put real money into Carnival now.

 

I hope you are right, and in the long term I think it is a given they will.

 

Carnival maybe not so much. The clientele is mainly older, and very risk adverse. Many will think twice before cruising again for a while. The whole cruise line model has been under pressure long before this panic.

 

Last week was what is traditionally called a dead cat bounce. They almost always occur in these situations. I bought in on some quality stocks today. Carnival was not one of them. I know I did not time the bottom, but they are great long term holds.

 

Totally agree with you. 

Waiting to see if it holds at or above the Feb 27, 2009 support level at 19.56.  If it breaks that the next support is 15.77

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12 minutes ago, npcl said:

Waiting to see if it holds at or above the Feb 27, 2009 support level at 19.56.  If it breaks that the next support is 15.77

 

I would not be surprised to see some consolidation in the cruise industry as well. Highly leveraged, cyclical companies that rely on continued cash flow do not weather events like this very well.

 

Carnival is probably best set to handle this. Have not looked at Norwegian that closely, but my assumption (possibly wrong) is that it may be the weakest of the big three North American cruise lines.

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1 hour ago, frugaltravel said:

Good luck with that. People keep saying they want to wait till a stock bottoms out before they buy. But by the time they realize it, the stock is already rising. Don't be greedy 😀

 

Who has said that?

 

My opinion ... there are lots of unknowns, and downward pressure on the stock right now.

I think the stock will continue lower.

 

Eventually, there will be vaccine for corona virus, and stock will go up.

 

Personally, I am not interested in catching the exact bottom; but rather perhaps

buying when the stock has started to recover.

 

I most definately am not interested in buying while the stock is still falling,

as some sort of plan not to miss the exact bottom.

 

 

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10 minutes ago, RMMariner said:

 

I would not be surprised to see some consolidation in the cruise industry as well. Highly leveraged, cyclical companies that rely on continued cash flow do not weather events like this very well.

 

Carnival is probably best set to handle this. Have not looked at Norwegian that closely, but my assumption (possibly wrong) is that it may be the weakest of the big three North American cruise lines.

i haven't read the actual financial report, but ppl on ncl forum has said that ncl has been the most profitable.

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1 hour ago, frugaltravel said:

Good luck with that. People keep saying they want to wait till a stock bottoms out before they buy. But by the time they realize it, the stock is already rising. Don't be greedy 😀

I generally don't try to time the market and it hits bottom, I'm quite happy to get after the bottom and it looks like we have a sustained recovery. Just look at the past 2 weeks when we have had 1000 point drops followed the next day by a 600-800 point recovery, only to drop again on day 3. 

 

My strategy is to wait for the bottom and then pick up CCL/RCL when its come back up a couple of bucks. 

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52 minutes ago, RMMariner said:

 

I would not be surprised to see some consolidation in the cruise industry as well. Highly leveraged, cyclical companies that rely on continued cash flow do not weather events like this very well.

 

Carnival is probably best set to handle this. Have not looked at Norwegian that closely, but my assumption (possibly wrong) is that it may be the weakest of the big three North American cruise lines.

How much consolidation can actually go on? CCL/RCL have dozens of brands under each of their umbrellas. Who are the major players outside of them. I know that NCL, Viking and now Virgin are not under the CCL/RCL brand, any others? 

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1 hour ago, npcl said:

Over 9 billion in in current debt, including 4.5 billion in customer deposits for cruises not yet taken, vs 500 million in cash, 450 million in accounts receivables and trade, and a 2.8 billion untapped in a 3 billion revolving line of credit.

 

Lots of assets but pretty much all in ships and land based tourist facilities, not liquid and with the entire industry under fire not sure how much anyone would lend against them.

 

I think it comes down to three big questions that have no firm answer.

1) How long until the industry recovers.  In addition to the immediate threat of corona virus, there may be lingering loss of confidence in the industry.  Examples like the Concordia suggest cruise lines can weather a big hit and still retain their customers, but no one knows for sure how this will ultimately shake out.

2) We know that they are going to take a major cash flow hit, but as of now I doubt anyone can accurately project how bad it will be.  Obviously the longer this is the bigger the hit, but also the more steps lines can take to mitigate losses.

3) How willing are lenders going to be to step in.  If they are assuming strong positive cash flow is likely in a couple years, its hard to imagine them turning down the opportunity to make some money by lending to CCL and others.  If they think this could have long lasting repercussions, it draws into question both repayment and the value of the collateral cruise lines can put up.  A billion dollar ship won't be worth nearly that if demand for cruising drops 50%.

 

Personally I think it is likely CCL can navigate this mess, but it will be a very painful proposition involving big revenue hits and being forced to take on a lot of debt on unfavorable terms.

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2 minutes ago, drowelf said:

How much consolidation can actually go on? CCL/RCL have dozens of brands under each of their umbrellas. Who are the major players outside of them. I know that NCL, Viking and now Virgin are not under the CCL/RCL brand, any others? 

Viking, Virgin, MSC, and Disney come to mind, in a addition to dozens of smaller brands.  Disney and MSC have corporate parents with deep pockets.  I'm not sure how Virgin is financed; I think Bain was involved but I don't know how much capital they are others want to throw at it.  I know little about Viking.

 

That said, my gut tells me the big three (CCL, RCCL, and NCLH) will be able to find capital, even if they have to pay dearly for it.  That may be harder for the smaller players, forcing bankruptcy or sales to companies that can weather the storm.

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On 2/28/2020 at 8:40 AM, ed01106 said:

This is pure speculation. 

 

I tend to agree we haven’t seen the bottom of the tourism stocks but reality is your broker doesn’t know the future.

 

On 2/28/2020 at 8:10 AM, Justalone said:

My broker suggested CCL will soon dip to $8 or less.   And may cut the annual dividend to zero.  

On Board Credit benefit will do no good if no one is cruising.

It will take years for CCL, if they don’t go bankrupt, to rebound from losses....and return to profitability..  unless one can wait 10-20 years if you currently have CCL stock.   Due to soon to be announced Corona virus as a world wide pandemic, she  advised to avoid all cruise company stocks as well as some airline stocks. She says  for now travel industry sector as a whole is too risky to invest in.

 

 

On 2/28/2020 at 8:40 AM, ed01106 said:

This is pure speculation. 

 

I tend to agree we haven’t seen the bottom of the tourism stocks but reality is your broker doesn’t know the future.

 

On 2/28/2020 at 4:13 PM, Colo Cruiser said:

I call BS

 

You think so?

I am so very glad I listened to the wisdom of my stock broker.   Bought put contracts on CCL.   Now hoping CCL stock will fall even lower.  

She also suggested shorting the stock market. Which I did.

Also increased my position in gold bars as a hedge.  Filled up one of my safety deposit boxes with gold bars.

She predicts OBC will continue as an incentive for cruisers to commit to cruising with Princess. 👍

She believes it is highly probable Princess will discontinue or reduce dividend payout.  👎

Believe what you want.   Buy more CCL stock and dollar average.   Maybe get you investment back in 5-10 years. In the meantime,  go on more cruises.   Take advantage of  your OBC.   It is going to be a fun ride.😁

 

 

Edited by Justalone
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1 hour ago, drowelf said:

How much consolidation can actually go on? CCL/RCL have dozens of brands under each of their umbrellas. Who are the major players outside of them. I know that NCL, Viking and now Virgin are not under the CCL/RCL brand, any others? 

Would not expect much consolidation because all of the companies are going to be under financial pressure so doubt anyone has the cash to absorb any that might fail.

 

I am more interested to see if any of the majors drop or merge any of their internal brands.  If any of the brands individually are weak you might see one or more go away and be absorbed within another brand of the holding company.

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40 minutes ago, npcl said:

Why would the US government bail out the cruise industry?  They are foreign corporations that just happen to have their Corporate HQ's here.  If they want a bail out they should ask the countries where their tax homes are.  In the case of CCL Panama.

 

If there was an industry that the US government has little incentive to help it would be the cruise industry.  Few american employees. Avoids most US taxes.  Ship building and dry docks are outside the US.

 

The only real impact on the US if the business goes away is on the port cities where ships are home ported and to some degree Alaska.  Pretty minimal.

Totally agree  . File for bankrupt reorganization  is a possibility  . It really depends on how long this virus  lasts especially here in the USA 

 I would not buy any travel industry company shares of stock  ,at this time  . Certainly the bottom of their stock prices have yet to be seen  & even if  they go into the penny stock pink sheets area & then   how long will it take to recover &   get to list  on a major exchange ? In our case we would not live so long 

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1 hour ago, HappyInVan said:

 

 

What is CCL worth if there is a three or sixth months industry cancellation? Based on back-of-envelop guesstimates, $30 would be a decent price for a short shutdown and $25 for a longer shutdown.

 

 

 

 

Ignoring your mutation comment, those numbers are encouraging. My dh bought some today. I bought bank and utility stocks. Our poor money manager has a hard time balancing our joint portfolio to our risk acceptance levels! 

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1 minute ago, XLVIII said:

Trump vows to help cruise lines:

 

https://www.bloomberg.com/news/articles/2020-03-10/trump-says-u-s-to-help-cruise-lines-airlines-as-virus-spreads

 

CCL, NCL and RCL stocks all rebounding after this announcement. We'll see if it holds.

Will be interesting to see if Congress is willing to go along, since any real help would require their approval.  Unlike banks which were key to the US economy, and GM which had major union involvement (the first time that the union's interests, were moved ahead of the interests of the debt holders in a bankruptcy), the cruise lines are neither key to the economy, nor do they have substantial union involvement.  

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7 minutes ago, XLVIII said:

Trump vows to help cruise lines:

 

https://www.bloomberg.com/news/articles/2020-03-10/trump-says-u-s-to-help-cruise-lines-airlines-as-virus-spreads

 

CCL, NCL and RCL stocks all rebounding after this announcement. We'll see if it holds.

 

I'm struggling to figure out ways to help them to offset the ways they've been hurt over the past few days (the hypercautious ports, the CDC/State Dept. announcements).  The only way I see is cash bailouts, which doesn't sound appealing and doesn't really solve the industry's problems IMHO.

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8 minutes ago, Honolulu Blue said:

 

I'm struggling to figure out ways to help them to offset the ways they've been hurt over the past few days (the hypercautious ports, the CDC/State Dept. announcements).  The only way I see is cash bailouts, which doesn't sound appealing and doesn't really solve the industry's problems IMHO.

After all the mechanisms that he had talked about earlier, tax credits, would help the airlines, but would not help cruise line cash flow problems.  Especially since their US taxes are minimal.

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Just took a look at CCL Bonds the 10/15/2020 that was paying 1.467 YTM yesterday, is paying 3.790 YTM today.  Price dropping quickly on bonds maturing this year.  Longer term bonds have moved, but not as much for example the 10/01/2023 that was 4.036 YTM yesterday is now 4.323 YTM.

 

Also CCL is now showing S&P Credit Watch Negative.

 

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3 minutes ago, bluesea321 said:

 

How could their S&P A- rating last!!!  Your crystal ball is as good (or bad) as mine but nonetheless their bonds may go south in a hurry.

A move of 1.467 to 3.790 on a bond maturing on 10/15/2020  in one day would seem to be a fairly big move.

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