Just reading back a couple of pages.
Quote:
Originally Posted by Dean2
Just a heads up, a few U.S. analysts appear to now agree with me about Carnival, who own Princess and quite a few others, and Norwegian cruise lines, having put a $0 and $1 price target on their shares. On top of investment considerations this has implications for putting deposits and fully paid cruise bookings in place with these companies. If you are going to book a cruise you may want to look at how you protect your deposits.
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Interesting because I was talking about it (not here; though maybe here too, not sure) last… June, perhaps, when the cruise liners were hitting post-pandemic high and people were proposing that this trend is to continue and they are going to explode once they hit the seas again. I laughed at the proposal and made good bank shorting RCL at the very top and NCLH later, which, by luck, happened the day before they announced yet another dilution. Here is one of my responses to one of the guys on the subject (CCL) from last year (there is one with way more detailed analysis of both CCL and NCLH, but for whatever reason I cannot find it):
I am sure it will run because people are crazy, but the following is to keep in mind because correction will come, without a doubt, when common sense (ie fundamentals) kicks in:
Right before the pandemic was declared, they had 685M shares outstanding; the current number is at about 1,200M. Those shares were trading at $51.9 per share at its peak; today they closed at $27.53. That provides a market cap of $35.55B at the peak before the pandemic and $33.04B currently.
At the same time, long-term debt increased from $12.94B to $31.33B. Cash on hand as at Feb 28 was $11.51B, up from $9.51B. That provides the enterprise value of $38.98 before the hit and $52.86B currently. This is a very rough calculation and some numbers may be slightly different, but it isn’t far off.
So, while they lost $11.43B last year (and made about $3B the year before), market cap hasn’t significantly changed and enterprise value rose by a whooping $14B! Pretty sure everyone in their right mind understands that this is insane.
This does not take into account that they will still be burning cash for the next few months, at least; and thus, issuing more shares or assuming more debt. Income prospects are also questionable for the foreseeable future for obvious reasons. For example, RCL’s CEO was talking about “favourable bookings” for 2022 (!). That was on the earnings call a couple of months ago (if I recall correctly).
Then add the green regulations that will come rather sooner than later since there were talks about it in not such a distant past and the current environmental concerns of the decision makers. That will require additional capital, which leads to more dilution and/or higher debt.
What I am saying is that it isn’t even remotely as bright as people are assuming it to be. Keep in mind that what I wrote above is really just the stuff on the surface and there is more **** to scratch. When the real market correction comes, cruise liners will be taking one of the biggest hits. When that correction comes is up for debate (not in the next few months, in my opinion, but I was wrong before). You should also keep in mind that they can dilute at any time and the last time they did was at the end of February; so we may be about due for another one, maybe not. Their next earnings call is on July 9, so that dilution may come before or right after, or not at all.
I haven’t looked at it since, I don’t recall, but it would be interesting to look at the same numbers now and see what they look like. I am assuming there is even more debt and more shares in the pool at this point. The analysts propping them up last year were probably heavily invested themselves or really have no clue what they were talking about. Can’t be the latter because there is no way that people like that can work for some of the most respectable banks and agencies, or can it? Lol.