Wall Street Sinks Carnival

[LocoLoco1]

Carnival stock South of $8/shr. today has me wondering if it will noticeably affect onboard experience as their business model adjust to long-term lack of profit. 

 

[GeorgeCharlie]

Hopefully they will thrive to improve their service from the rough startup they've had since the COVID shutdown. As reported, the near future looks much better, with cumulative advance bookings for full year 2023 were reported to be slightly above the historical average and at considerably higher prices, as compared to 2019 sailings, normalized for future credits.

 

So, it looks like 2023 is starting off fairly good for them.😎

[The-Inside-Cabin]

I bought another 100 shares.    Analysts expected better, but the trend is in the right direction.    

positive EBITDA for first time.  

 

Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) provides third quarter 2022 business update.

• U.S. GAAP net loss of $770 million and adjusted net loss of $688 million for the third quarter of 2022.
• Adjusted EBITDA for the third quarter of 2022 was over $300 million, turning positive for the first time since the resumption of guest cruise operations and marking a significant milestone.
• Revenue increased by nearly 80% in the third quarter of 2022 compared to second quarter 2022, reflecting continued sequential improvement.
• Occupancy in the third quarter of 2022 increased 15 percentage points from the prior quarter.
• Since the announcement of the company's relaxed protocols in mid-August, aligning the company towards land-based vacation alternatives, booking volumes for all future sailings are considerably higher than strong 2019 levels.
• Third quarter 2022 ended with $7.4 billion of liquidity, including cash and borrowings available under the company's revolving credit facility.

[LocoLoco1]

I noticed a HUGE difference aboard a Cunard from Southhampton vs a 3/wk Carribbean on a HAL just recently. Cunard experience was what HAL used to be. Difference between night and day actually.. music, hor d’ouvers, food, bar service, (a REAL library, an actual heated Pool) etc.  Here’s hoping a diluting of the experience doesn’t cascade across the whole CCL fleet. 

[BermudaBound2014]

To reply to the bullets:

 

1. They lost more money during the absolute busiest three months of the year. Q4 is going to be brutal.

 

2.  EBITDA positive because they offered 1.5 Billion in dilution.

 

3. Notice how they didn't say revenue increased when compared to 2019? Of course revenue increased when compared to April, May, and June. It should.

 

4. CCL predicted 110% occupancy. In Q2 they had 69% occupancy Q@ so an increase of 15% brings them to 84% during their most busy season and far below what CCL predicted. 

 

5. Yes, relaxing protocols increased booking volume. However; you can't compare VOLUME that to 2019 because in 2019 there was less volume to book. Therefore, booking volumes maybe up but occupancy may very well still below. 

 

6. Again; CCL lost more money than predicted during the most busy season of the year. 

 

The trend is in the right direction, but the figures are dismal. At this rate they will not even be able to pay interest on their loans. Add to that the recession and this has plenty of downward movement left. Let us not forget they are projecting another loss for Q4 and based on occupancy rates I'm tracking, this has the potential to be MUCH larger than the loss they had July, Aug, and Sept. 

Edited September 30, 2022 by BermudaBound2014

[LocoLoco1]

I guess where my musings are taking me is: Perhaps I might have a better on-land experience at some All-inclusive in Hawaii, or Aruba or Switzerland-by-Trainetc. if the nibbling around the edges finally go much further. I sense it already has. Catering to brutal demands of lenders and not the customer doesn’t bode well for any hospitality business. Here’s hoping I make 5-star..

[Mary229]

Ummmm, have you looked at the rest of the stock market.  There is no good news on Wall Street.   Cherry picking a single stock isn’t going to help you make sense of what is going on.   There are dangerous Geo-political and economic-political disasters unfolding. 

Edited September 30, 2022 by Mary229

[CruiserBruce]

And, of course, there will be many more posts here from people complaining about nickel and diming, cost cutting and price increases...

[kangforpres]

Yes, look at the S&P and Dow over the last 2 years in a chart. Apple, Amazon, FB all have lost value.

[iceman93]

37 minutes ago, CruiserBruce said:

And, of course, there will be many more posts here from people complaining about nickel and diming, cost cutting and price increases...

I honestly haven't seen complaints here about price increases.  In general (and of course I might be wrong), I think HAL's clientele is willing to pay a little more to get a little more.  Where people complain is definitely in the nickel & diming and cost-cutting.

 

HAL used to be, and still positions itself as, a premium cruise line.  I expect them to be somewhere between mass-market (where base fare is what drives purchase decisions, and on-board nickel-and-diming is totally to be expected) and luxury (where overall experience is more important than price, and everything should be included and the overall experience should be seamless).

 

Unfortunately, I think we've seen them make changes to push them closer to the mass-market lines than the luxury lines.  Personally, I think there is a huge market for "premium" cruising and HAL is inexplicably walking away from a niche they could dominate.

[BermudaBound2014]

30 minutes ago, kangforpres said:

Yes, look at the S&P and Dow over the last 2 years in a chart. Apple, Amazon, FB all have lost value.

 

But they aren't losing money at the same rate as the cruise industry. In fact, Apple is up compared to the S&P (just checked, that surprised me). 

 

In the last year Carnival has lost 71% of it's value. NCL and RCL are around 60% (so is facebook). Comparatively Amazon is down about 30% (still a big ouchy, but cruise lines have lost just about twice as much value as Amazon in %).  The S&P and DOW are down about 17% but Apple is only down 2%. That means lots of companies are doing much better than Apple, Amazon, and Facebook and HUGELY better than cruise companies. 

 

Edited September 30, 2022 by BermudaBound2014

[BermudaBound2014]

To recap the day.

 

CCL ended up about 24% down and closed at $7.01. Lowest it's been since 1993. It looks like after hours trading will see $6.

 

NCL lost another18%

RCL lost about 13%

 

For comparison sake, the S&P lost 1.5% 

[Anne614]

I made my first purchase of 100 CCL shares today at $7.02. After close it looks like it’s trading at 7.06. My husband is retiring soon so we will be able to take longer cruises.  

[kazu]

4 hours ago, LocoLoco1 said:

I noticed a HUGE difference aboard a Cunard from Southhampton vs a 3/wk Carribbean on a HAL just recently. Cunard experience was what HAL used to be. Difference between night and day actually.. music, hor d’ouvers, food, bar service, (a REAL library, an actual heated Pool) etc.  Here’s hoping a diluting of the experience doesn’t cascade across the whole CCL fleet. 

 

That’s always how it was on the Prinsendam and there are still a HAL ship or two with “real” libraries but they sold the Prinsendam rather than put $$$ into her maintenance due to age (and she had the highest profit per passenger in the fleet). 😉.  She is sailing again under a German flag with huge monies invested in her.  HAL missed the mark IMO - the ship was full most of the time. Sold at a premier price due to it’s size and had a huge following despite the lack of bells and whistles.

I can assure you that if CCL had to dilute - it won’t be just with HAL - or they will segment - one cruise line will be premier and the other mass market.  Just a guess on my part

 

1 hour ago, BermudaBound2014 said:

 

But they aren't losing money at the same rate as the cruise industry. In fact, Apple is up compared to the S&P (just checked, that surprised me). 

 

In the last year Carnival has lost 71% of it's value. NCL and RCL are around 60% (so is facebook). Comparatively Amazon is down about 30% (still a big ouchy, but cruise lines have lost just about twice as much value as Amazon in %).  The S&P and DOW are down about 17% but Apple is only down 2%. That means lots of companies are doing much better than Apple, Amazon, and Facebook and HUGELY better than cruise companies. 

 

Unlike you I am not in panic mode - in fact I might buy more with the dividends from CCL & do a mini gamble.  Waiting to see how low it goes.  LOL.
 

I never considered this stock an investment - I bought it literally for the OBC and between the dividends and OBC I have received (tax free and in USD) I have more than broken even.  Do I want to see it sink?  Of course not.  Would I like it to go back up?  Of course.  But my fate does not hang on a measley 100 shares of CCL, thankfully 😉 

 

I told my FP long ago that this was not a stock that fit in my porfolio and we were not discussing it.  I should have sold and re-bought.  I didn’t.  Not the end of the world.  I have bigger worries than that.

[Sir PMP]

The way the numbers look and the direction they're going, I don't see any improvement in 2023.

[BermudaBound2014]

40 minutes ago, kazu said:

Unlike you I am not in panic mode - in fact I might buy more with the dividends from CCL & do a mini gamble.  Waiting to see how low it goes.  LOL.
 

I never considered this stock an investment - I bought it literally for the OBC and between the dividends and OBC I have received (tax free and in USD) I have more than broken even.  Do I want to see it sink?  Of course not.  Would I like it to go back up?  Of course.  But my fate does not hang on a measley 100 shares of CCL, thankfully 😉 

 

I told my FP long ago that this was not a stock that fit in my porfolio and we were not discussing it.  I should have sold and re-bought.  I didn’t.  Not the end of the world.  I have bigger worries than that.

Panic mode? Lol. What’s there to panic about? Unlike you, I hold short positions of this stock. Switched to shorts after making many years of OBC. Writing has been on the wall for over a year. Thankfully I shorted more than a mere 100 shares. Today was extremely profitable for me. If I didn’t love the industry as a whole I would be celebrating this victory. Panic is the farthest thing from my mind at the moment.

 

I’ll either ride  to zero or switch back to longs when it falls below $4. I do understand how longs might panic though, but shorts have everything pointing In our favor. 
 

 

 

 

Edited September 30, 2022 by BermudaBound2014

[LocoLoco1]

Huge, huge debt. THAT, in nutshell, is the problem. Competitive pricing to ‘fill beds’, Fuel, food, labor woes, etc pale by comparison to that big elephant in the room, debt service. The CATs, WalMart, Ford, Apple, JP Morgans el al usually survive business cycles, but methinks right here,right now, CCL is in a very bad spot. Nov.Trans-Atlantic may be an eyeopener as to what they can deliver to us guests. 

[JeffElizabeth]

Personally I think the pre-Covid years were a cruising golden age compared to what is coming. Expect to see lines absorbed or go bankrupt in the middle of cruises,  especially the smaller lines.

Someone above was looking into land vacations instead, I did a week in Mexico at an all-inclusive and it was slightly better, but they were really wanting people to buy a unit or a time share.  Restaurants closed, cutting back on staff. 

 

[BermudaBound2014]

1 minute ago, JeffElizabeth said:

Personally I think the pre-Covid years were a cruising golden age compared to what is coming. Expect to see lines absorbed or go bankrupt in the middle of cruises,  especially the smaller lines.

Someone above was looking into land vacations instead, I did a week in Mexico at an all-inclusive and it was slightly better, but they were really wanting people to buy a unit or a time share.  Restaurants closed, cutting back on staff. 

 

 

It seems everyone is hurting, but no where near the level that the cruise industry is hurting. That's because no other industry was shuttered for 18 months and then plagued with tremendous expenses to 'keep everyone safe'. And then held to entirely different protocols once the world opened. Not to mention the number of people who will never cruise again due to the bad press the industry received in 2020. People look at virus's different now and like it or not, population density is linked to exposure/spread (of any virus). No way around that. 

 

It's not fair, but as Hank said, it is what it is. 

 

 

 

 

[rkacruiser]

The mixed messaging that I am reading today after the CCL report on this Board as well as on others makes me more determined than ever that I "will stay the course" with my investments in CCL.  None of us are in the Executive Suite in Miami as far as I know.  We know not what the thinking is other than what they report. "Buy quality and hold":  isn't this what Mr. Buffet as done?  I am a Buffet believer.  I bought quality.  I held when we went through this last very negative cycle for cruise stocks.  I bought more when the time was right to do so.  I surely don't want to see my holdings drop to worthless.  But, if they do, I have other pots that have done and are doing well.  

[NorthWestPassage]

2 hours ago, kazu said:

Unlike you I am not in panic mode - in fact I might buy more with the dividends from CCL & do a mini gamble.  Waiting to see how low it goes.  LOL.
 

I never considered this stock an investment - I bought it literally for the OBC and between the dividends and OBC I have received (tax free and in USD) I have more than broken even.

I don’t think Carnival pays a dividend…..certainly not this year.

[kazu]

10 minutes ago, NorthWestPassage said:

I don’t think Carnival pays a dividend…..certainly not this year.

 

No, they don’t now but they certainly did for many years - I never said they did now - I was referencing the returns I have had between those & the OBC.   They have been taken into account in my calculations 🙂 

[LocoLoco1]

I will still cruise. My 40’s adult children and their friends? ‘Probably not’. The misery of Airplanes, Internet service, not being ‘Green’, no smoke and whatnot makes it not their Cup o Tea they say. Luxury cruising for retirees will have ‘A durable competitive advantage’, for years/decades to come, I think. The generic cruiseline experience? If they’re not $Moneymakers$, maybe not.   

[cbr663]

3 hours ago, LocoLoco1 said:

Huge, huge debt. THAT, in nutshell, is the problem. Competitive pricing to ‘fill beds’, Fuel, food, labor woes, etc pale by comparison to that big elephant in the room, debt service. The CATs, WalMart, Ford, Apple, JP Morgans el al usually survive business cycles, but methinks right here,right now, CCL is in a very bad spot. Nov.Trans-Atlantic may be an eyeopener as to what they can deliver to us guests. 

 

I chuckled when I read, "competitive pricing to full beds."  For months now this board has been littered with threads of people taking advantage of free and deeply discounted cruise fares.

 

I agree that CCL financially is in a very bad spot.  Never mind the debt - keep an eye on the cash.  Once it runs out, operations will cease.

[cruisemom42]

It's beyond the scope of this forum to be having detailed discussions of the stock market other than the impact on cruising. Frankly, I don't come here for stock advice, I want to hear how my cruise is going to be. I almost feel like if CC is going to ban detailed medical discussions (e.g., of COVID), they should also ban detailed stock market discussions.

 

It doesn't really matter to me how the stock market in general is doing (well it does, but not for the purposes of this board) -- what matters HERE is how the fallout will impact the cruise lines I like to to cruise on.

 

HAL has not been a premium line for quite some time, please take off your rose-colored glasses. At best, one could say that HAL, Celebrity and Princess are at the upper end of mass market lines. Premium lines are Azamara and Oceania -- small ship lines, get it?  HAL has clearly signaled that they are not headed in that direction, getting rid of smaller ships and building larger ones.  It's a direction they were already firmly headed in prior to COVID.

 

I believe cruise lines are going to face hard times, and I do not think they should expect customers to stay loyal just because they once really loved a certain line. HAL is not loyal to me as an individual customer, and I don't expect them to be. But some here seem to feel that they need to be loyal to HAL despite the continuing dilution of the product delivered onboard.  It's as if some feel they are married to HAL "for better or worse".