Here's a scarey headline for CCL stockholders: Carnival Stock Could Fall to $0 in a Worst Case Scenario

[Ombud]

2 hours ago, Cruise Raider said:

Can you tell me if E424 over Crooners on the Royal Princess is noisy at night?  

Hope not. I'm there next April. I usually am over the stores (E425). Actually nothing goes that late on Princess. Deadly quiet at night.

[Cruise Raider]

14 minutes ago, Ombud said:

Hope not. I'm there next April. I usually am over the stores (E425). Actually nothing goes that late on Princess. Deadly quiet at night.

 

Us, too. I think we will go for it.  Thanks for the reminder. 

[DCThunder]

It looks like the CDC announcement of late yesterday is sparking all the cruise line stocks today.  CCL is up so far today and back over $10/share.  Dead cat bounce?  🤷‍♂️

[Billish]

1 hour ago, DCThunder said:

It looks like the CDC announcement of late yesterday is sparking all the cruise line stocks today.  CCL is up so far today and back over $10/share.  Dead cat bounce?  🤷‍♂️

Up a massive 2% in the UK today,  so not even a bounce !

[Ombud]

11 hours ago, Billish said:

12 hours ago, DCThunder said:

It looks like the CDC announcement of late yesterday is sparking all the cruise line stocks today.  CCL is up so far today and back over $10/share.  Dead cat bounce?  🤷‍♂️

Up a massive 2% in the UK today,  so not even a bounce !

Up 7.36% during hours + 1.35% after hours. No idea how much of that 8.71% goes back tomorrow 

[ontheweb]

Many of the days the Carnival stock went down were days the whole market went down a lot. Yesterday the market went up a whole lot 700+ points.

[TwoBadKnees]

More stock dilution?

 

https://www.cruiseindustrynews.com/cruise-news/27887-carnival-corporation-prices-stock-offering-at-9-95.html

[Guest ldtr]

1 hour ago, TwoBadKnees said:

More stock dilution?

 

https://www.cruiseindustrynews.com/cruise-news/27887-carnival-corporation-prices-stock-offering-at-9-95.html

Probably not the last.

 

It is kind of ironic that CCL and for that matter the other holding companies (RCL and NCLH) need to accomplish one goal no matter what path forward they take.  For them to survive without bankruptcy they need to get to full occupancy.  For them to convince debt holders to support a reorganization, they would need to show that they would be profitable after the reorganization.  To do that they would also need to get to full occupancy.

 

Basically if they cannot get back to that level their entire business model (the one that has been very successful for the industry pre-covid) fails.  That model is built on large economically efficient ships, allowing them to sell bookings at prices that are very competitive to land based travel.

 

At this point they are trading for time to get back to that occupancy level.

[CineGraphic]

Here's a headline from today:

 

Carnival stock leads S&P 500 losers after analyst sees equity offering causing 'panic'

 

 

[mnocket]

1 hour ago, CineGraphic said:

Here's a headline from today:

 

Carnival stock leads S&P 500 losers after analyst sees equity offering causing 'panic'

 

 

Yeah, remember back whey they all were saying things like "we have enough cash to support operations for at least the next 18 months" ?  Well they have now run out of runway and need to raise more cash to stay operational.  This, along with the obvious dilution of offering more shares, is having the predictable effect on the stock prices.  CCL was first, but I suspect we'll see the other major lines following suit in the near future.

[Ombud]

5 minutes ago, mnocket said:

Yeah, remember back whey they all were saying things like "we have enough cash to support operations for at least the next 18 months" ?  Well they have now run out of runway and need to raise more cash to stay operational.  This, along with the obvious dilution of offering more shares, is having the predictable effect on the stock prices.  CCL was first, but I suspect we'll see the other major lines following suit in the near future.

Yep. 18 months ran out. Bet a lot of last year's cruises were just FCC. I know that last month's cruise was the 1st time I laid out cash. And I didn't put out any for next month. (8/15/21, 12/9/21, 4/23/22, 6/23/22, 9/2/22 only cost me an additional $1000 -- that won't cover the bills)

[clueless2]

Barron's had a story that said this stock offering was to pay off debt due next month that they don't want to refinance at 12%,

[Guest ldtr]

1 hour ago, mnocket said:

Yeah, remember back whey they all were saying things like "we have enough cash to support operations for at least the next 18 months" ?  Well they have now run out of runway and need to raise more cash to stay operational.  This, along with the obvious dilution of offering more shares, is having the predictable effect on the stock prices.  CCL was first, but I suspect we'll see the other major lines following suit in the near future.

Considering that CCL has over 7 billion in cash, they did not run out of runway.  Instead they are taking advantage of any opportunity to raise cash.  The timing was not because they needed to do it now.  The timing was because they could do it now, and the stock price might be even worse later on.

[mnocket]

48 minutes ago, ldtr said:

Considering that CCL has over 7 billion in cash, they did not run out of runway.

Keep in mind that runway and cash on hand are related, but not the same thing.

 

Runway is essentially how many months will your current cash will last.  CCL's cash has remained relatively stable the past 2 years, but this is because they have continued to raise additional cash by selling bonds.  The result...debt has increased from $9.7B (11/30/2019) to $22.1B (11/30/2020) to $28.5B (11/30/2021) and stood at $29.2B on 5/31/2022.  So cash has remained stable because they keep taking on more and more debt.  In truth, cash has taken a dip in the past several quarters so this stock sale is to refill the coffers. 

 

At the same time that they are taking on more debt to sustain operations, their operating income remains severely in the red fluctuating between a quarterly loss of $1.5B-$2.0B each quarter (hence the need to continue to raise more case). Now add in the fact that some of this debt is coming to maturity and must be repaid and their runway is indeed getting short.  

 

Simplified .....  Runway = Cash/Burn Rate

 

Burn Rate can be calculated several different ways , but the simplest is to look at change in cash (this takes into account not only operating loss but other expenses like debt repayment).  Using this method there is a monthly burn rate of $841M yielding runway of 2.9 months.

 

Now if we only look at Operating Loss the Burn Rate would be $497M/month yielding a runway of 8.2 months, but keep in mind that this only considers Operating Loss.

 

So yes, CCL still has cash, but they also have a short runway.  Unless there is a dramatic change in their business, they will need to raise even more cash beyond this stock sale.  The problem is that their avenues for raising additional cash are narrowing and growing even more expensive.  It's too early to call it a death spiral, but it's not a pretty picture - even with their cash.

 

 

 

 

[Guest ldtr]

32 minutes ago, mnocket said:

Keep in mind that runway and cash on hand are related, but not the same thing.

 

Runway is essentially how many months will your current cash will last.  CCL's cash has remained relatively stable the past 2 years, but this is because they have continued to raise additional cash by selling bonds.  The result...debt has increased from $9.7B (11/30/2019) to $22.1B (11/30/2020) to $28.5B (11/30/2021) and stood at $29.2B on 5/31/2022.  So cash has remained stable because they keep taking on more and more debt.  In truth, cash has taken a dip in the past several quarters so this stock sale is to refill the coffers. 

 

At the same time that they are taking on more debt to sustain operations, their operating income remains severely in the red fluctuating between a quarterly loss of $1.5B-$2.0B each quarter (hence the need to continue to raise more case). Now add in the fact that some of this debt is coming to maturity and must be repaid and their runway is indeed getting short.  

 

Simplified .....  Runway = Cash/Burn Rate

 

Burn Rate can be calculated several different ways , but the simplest is to look at change in cash (this takes into account not only operating loss but other expenses like debt repayment).  Using this method there is a monthly burn rate of $841M yielding runway of 2.9 months.

 

Now if we only look at Operating Loss the Burn Rate would be $497M/month yielding a runway of 8.2 months, but keep in mind that this only considers Operating Loss.

 

So yes, CCL still has cash, but they also have a short runway.  Unless there is a dramatic change in their business, they will need to raise even more cash beyond this stock sale.  The problem is that their avenues for raising additional cash are narrowing and growing even more expensive.  It's too early to call it a death spiral, but it's not a pretty picture - even with their cash.

 

 

 

 

Actually if you look at cash side of things they had an operating income loss of 1.47 last quarter, but that included depreciation, so if one looks at actual cash it was more like .9  or more like 300 million per month operating loss.  Their total net loss minus depreciation was  was about 1.260 or about 420 million per month including debt interest payments.

 

As far as cash goes their cash balance drops about 1 billion for each of the last two quarters going from 8.9 to 7.0.

 

At their current cash burn rate is running about 1.2 billion per quarter.  Most of the debt they have coming due this year is secured and should be renewed. So their cash should be good for about 16 months at current burn rate or about 14 months if they paid the note from cash instead selling more stock to make the loan payment.

 

Keep in mind that if your numbers were correct and if they did not have enough cash to support operations for at least the next 12 months then AS2415 comes into play and the auditors  comment about continuing as a going concern would come into play.

 

Since the sale of stock is being used to pay off one debt it improves their balance sheet but does not reload their cash on had.

 

Of course the expectations are they they will continue to improve their occupancy rate and the cash burn rate should drop significantly.  Also as they increase occupancy the amount of deposits and booking will increase, especially as a higher percentage of bookings will be cash and not paind by FCCs.  in normal times with payments due 90 days in advance that means that they will have 1/4 of full years revenue as cash before the cruises are taken.  Prior to the start of Covid that used that to have fund construction of new ships and ran with a cash balance of about 50% of their liability for cruises booked but not taken..  Something that the cruise lines have used to their advantage.

 

So if booking go up their cash will go in line, their losses and burn rate will decrease and run way increases.  If it does not go up then it really doesn't matter.

 

Basically even if they had not refinanced that one note that was paid off they could have gone 1 to 2 quarters longer before risking triggering AS2415 which would usually be considered to be running out of runway.

 

[mnocket]

3 hours ago, ldtr said:

Actually if you look at cash side of things they had an operating income loss of 1.47 last quarter, but that included depreciation, so if one looks at actual cash it was more like .9  or more like 300 million per month operating loss.  Their total net loss minus depreciation was  was about 1.260 or about 420 million per month including debt interest payments.

 

As far as cash goes their cash balance drops about 1 billion for each of the last two quarters going from 8.9 to 7.0.

 

At their current cash burn rate is running about 1.2 billion per quarter.  Most of the debt they have coming due this year is secured and should be renewed. So their cash should be good for about 16 months at current burn rate or about 14 months if they paid the note from cash instead selling more stock to make the loan payment.

 

Keep in mind that if your numbers were correct and if they did not have enough cash to support operations for at least the next 12 months then AS2415 comes into play and the auditors  comment about continuing as a going concern would come into play.

 

Since the sale of stock is being used to pay off one debt it improves their balance sheet but does not reload their cash on had.

 

Of course the expectations are they they will continue to improve their occupancy rate and the cash burn rate should drop significantly.  Also as they increase occupancy the amount of deposits and booking will increase, especially as a higher percentage of bookings will be cash and not paind by FCCs.  in normal times with payments due 90 days in advance that means that they will have 1/4 of full years revenue as cash before the cruises are taken.  Prior to the start of Covid that used that to have fund construction of new ships and ran with a cash balance of about 50% of their liability for cruises booked but not taken..  Something that the cruise lines have used to their advantage.

 

So if booking go up their cash will go in line, their losses and burn rate will decrease and run way increases.  If it does not go up then it really doesn't matter.

 

Basically even if they had not refinanced that one note that was paid off they could have gone 1 to 2 quarters longer before risking triggering AS2415 which would usually be considered to be running out of runway.

 

Differing opinions - that's what makes a market.  One person buys because they foresee the stock price rising and the counterparty sells because they foresee the price dropping.  Everyone is free to look at the numbers and reach their own conclusion.  

 

To clarify one thing.....  The analysis/numbers I presented were not mine.  They are from investing sites that I use.  In this case the links are...

https://docoh.com/company/815097/CCL

 

https://www.investing.com/equities/carnival-corp-exch-balance-sheet

 

Your analysis may be right and they may be wrong, but they're a couple of the sources that I've been using to help inform my investment decisions.

[Guest ldtr]

1 hour ago, mnocket said:

Differing opinions - that's what makes a market.  One person buys because they foresee the stock price rising and the counterparty sells because they foresee the price dropping.  Everyone is free to look at the numbers and reach their own conclusion.  

 

To clarify one thing.....  The analysis/numbers I presented were not mine.  They are from investing sites that I use.  In this case the links are...

https://docoh.com/company/815097/CCL

 

https://www.investing.com/equities/carnival-corp-exch-balance-sheet

 

Your analysis may be right and they may be wrong, but they're a couple of the sources that I've been using to help inform my investment decisions.

Mine are from the 10Q Filed on June 29th, as well as from previous 10Q and 10K filings

 

I have no interest in investing in any cruise line stock.  Just point out that from their most recent filings they still have a fair amount of time based upon cash and cash burn.

[Stockjock]

I know that this is a thread largely about Carnival stock in a Princess forum, but I note that MSC is going crazy building new ships and pretty much nothing seems to be on hold.

As you may know, MSC is the world's 2nd largest shipping company (I believe), and so when the cruise industry is not so good, the shipping container industry may be booming to supply support and cash flow to the cruising side of the business.

MSC can be very good or very bad, depending, but it does seem to be a business model that makes sense due to diversification of revenue.

[Over from NZ]

Also a bit of a risk to book cruises with them. Generally, travel insurance won't cover you if they go into insolvency. Really unsure if I should be parting with many thousands of dollars to them. Passengers would be unsecured creditors.  

[Billish]

17 minutes ago, Over from NZ said:

Also a bit of a risk to book cruises with them. Generally, travel insurance won't cover you if they go into insolvency. Really unsure if I should be parting with many thousands of dollars to them. Passengers would be unsecured creditors.  

One of the benefits of booking in the UK.  UK consumer protection laws mean that if they go bust, you get your money back. 

Edited July 23, 2022 by Billish

[Honolulu Blue]

2 hours ago, Over from NZ said:

Also a bit of a risk to book cruises with them. Generally, travel insurance won't cover you if they go into insolvency. Really unsure if I should be parting with many thousands of dollars to them. Passengers would be unsecured creditors.  

All true.  If there was a "substantial" risk that cruises from my chosen cruise line(s) wouldn't go, I wouldn't book there either.  But as I explained earlier, I don't think CCL is at that much risk right now.

[Cruise till you drop]

Well CCL down almost 6% yesterday.  I have 100 shares on CCL and won’t make or break me so I have a half hearted interest.

 I have read through most of this thread and do concur with a few of the observations that

1) no business can usually go this long with greatly depleted sales and stay in business 

2) that Ch 11 Bankruptcy is reorganization and allows a company to have a “do over” 

 

So not to sound like a naysayer but I’m banking the value of my 100 shares will eventually be $0 but CCL will keep sailing.

 

That’s just my opinion.

[CruizinSusan70]

22 hours ago, Stockjock said:

I know that this is a thread largely about Carnival stock in a Princess forum, but I note that MSC is going crazy building new ships and pretty much nothing seems to be on hold.

As you may know, MSC is the world's 2nd largest shipping company (I believe), and so when the cruise industry is not so good, the shipping container industry may be booming to supply support and cash flow to the cruising side of the business.

MSC can be very good or very bad, depending, but it does seem to be a business model that makes sense due to diversification of revenue.

MSC currently has a dozen ships in the pipeline ready to come out.  Six are from their main company, MSC and the other six are from their elevated subsidiary Explora Journeys, which will be an entire ship of 461 suites similar to the Yacht Club.  The Yacht Club is the ship within a ship concept similar to the Haven on NCL.  Explora Journeys 1 comes out in 2023.