Covid, Economy or Staff Shortages

[Cruisemeister2002]

I notice that the bottom is falling out of Carnival shares and I wonder what others think the reason for this is. Whether it's the economy taking a dive due to all these rising prices, covid still around or staff shortages leading to comments about various venues and facilities not being available, poor entertainment, not such good service and difficulties in getting drinks with the meal plus addition costs for certain things putting people off booking future cruises.

[yorkshirephil]

1 minute ago, Cruisemeister2002 said:

I notice that the bottom is falling out of Carnival shares and I wonder what others think the reason for this is. Whether it's the economy taking a dive due to all these rising prices, covid still around or staff shortages leading to comments about various venues and facilities not being available, poor entertainment, not such good service and difficulties in getting drinks with the meal plus addition costs for certain things putting people off booking future cruises.

I don't see the failings of P&O having a great impact on the Carnival share price as they are only a small part, I think the upcoming recession and general global fears are probably having more impact. When things are tight people have a habit of hanging on to their cash. 

[Harry Peterson]

Who knows? Stock markets generally are taking a hit, which comes as no great surprise because they've been felt by many to be overvalued for some time. 

 

On top of that, if there's a recession and severe restraints on money available for discretionary spending cruises are likely to be amongst the first things to be cut out.  People struggling to pay food and energy bills, wherever they are in the world, don't have much left over for expensive holidays.

 

I don't think the full impact of what's going to happen to energy bills from 1 October in the UK (up an estimated further 42%) has really hit home yet.  P&O is only a small part of the equation, but the problem is worldwide.

[david63]

Not sure where you are getting your information from

1 hour ago, Cruisemeister2002 said:

staff shortages leading to comments about various venues and facilities not being available

All venues are currently available on Britannia

1 hour ago, Cruisemeister2002 said:

poor entertainment,

Entertainment on Britannia is the same as pre Covid

1 hour ago, Cruisemeister2002 said:

difficulties in getting drinks with the meal

No problem at all in getting drinks with meals in any venue

 

1 hour ago, Cruisemeister2002 said:

addition costs for certain things

No thing more than pre Covid

[bbtablet]

100 Carnival shares are so cheap now - around £875 paid today -  that with the 4 cruises we have booked over the next 3 summers the shares will effectively become nearly free as a result of the £150 OBC they entitle us to on each one.

(We wouldn't normally have 4 in three years but they are concertinaed due to several COVID cancellations since 2019)

[Megabear2]

Looks like something else may be going

 

https://www.cnbc.com/2022/05/24/saudi-fund-in-early-talks-to-potentially-buy-carnivals-ultra-luxury-seabourn-brand.html

 

 

[crompton21]

Carnival have just issued another $1 billion of loan notes, the issue interest rate was back to 10.5% having been about half of that last year.  
The more interest that they pay, the less profit they make (or increased loss).  Clearly at this moment they are having to pay to borrow money at extortionate rates which is reflective of the view lenders are taking on the likelihood of the loan defaulting.

shareholders appear to be taking a similar view.

[Ardennais]

Any recommendations regarding where to buy Carnival shares? Not interested in any other shares so it would just be the one-off if I were to take the plunge! 

[daiB]

18 hours ago, Cruisemeister2002 said:

I notice that the bottom is falling out of Carnival shares and I wonder what others think the reason for this is. Whether it's the economy taking a dive due to all these rising prices, covid still around or staff shortages leading to comments about various venues and facilities not being available, poor entertainment, not such good service and difficulties in getting drinks with the meal plus addition costs for certain things putting people off booking future cruises.

As David 63 pointed out the problems you mention are not affecting P&O to any extent. On the other hand they are having a greater effect on cruise lines in the US. All of which seem to be having to cut back. With a number reducing the range of products on offer. Some of these are in the Carnival group.

[molecrochip]

10 hours ago, crompton21 said:

Carnival have just issued another $1 billion of loan notes, the issue interest rate was back to 10.5% having been about half of that last year.  
The more interest that they pay, the less profit they make (or increased loss).  Clearly at this moment they are having to pay to borrow money at extortionate rates which is reflective of the view lenders are taking on the likelihood of the loan defaulting.

shareholders appear to be taking a similar view.

During the pandemic the rates were up to about 15% and then sunk back to to around 6%-7% bearing in mind the Corporate borrowing rates are generally significantly more expensive than consumer borrowing. Also worth noting that global interest rates have moved since then and the world has practically stepped closer to war and recession (which is ironic as we should have had a heavy recession due to the pandemic but didn't because of the pent up demand for consumer spending). So I'd say that 10.5% isn't a fair commercial rate at present and likely to be renegotiated as soon as cheaper borrowing is available (as we saw during the pandemic).

 

The other thing to bear in mind is that Carnival chose to borrow this but didn't need to. It could have used its own reserves.

17 hours ago, Megabear2 said:

Looks like something else may be going

 

https://www.cnbc.com/2022/05/24/saudi-fund-in-early-talks-to-potentially-buy-carnivals-ultra-luxury-seabourn-brand.html

This has been bubbling internally for a couple of days however its obviously commercially sensitive. However I see it as a good thing that those who bought into Carnival at the hight of the pandemic are now keen to own a slice for real. This transaction could end up reducing the Saudi PIF % in the company instead of being undertaken for cash. Alternatively, it may end up as a Joint Venture for the time being (my suspicion). Seabourn, being a small niche operator, relies on the Corporate Group for its back-office support therefore its not as easy as just hiving off part of the business. 

[Harry Peterson]

11 minutes ago, molecrochip said:

During the pandemic the rates were up to about 15% and then sunk back to to around 6%-7% bearing in mind the Corporate borrowing rates are generally significantly more expensive than consumer borrowing. Also worth noting that global interest rates have moved since then and the world has practically stepped closer to war and recession (which is ironic as we should have had a heavy recession due to the pandemic but didn't because of the pent up demand for consumer spending). So I'd say that 10.5% isn't a fair commercial rate at present and likely to be renegotiated as soon as cheaper borrowing is available (as we saw during the pandemic).

 

The other thing to bear in mind is that Carnival chose to borrow this but didn't need to. It could have used its own reserves.

This has been bubbling internally for a couple of days however its obviously commercially sensitive. However I see it as a good thing that those who bought into Carnival at the hight of the pandemic are now keen to own a slice for real. This transaction could end up reducing the Saudi PIF % in the company instead of being undertaken for cash. Alternatively, it may end up as a Joint Venture for the time being (my suspicion). Seabourn, being a small niche operator, relies on the Corporate Group for its back-office support therefore its not as easy as just hiving off part of the business. 

What’s a fair commercial rate depends to a very large extent on the perceived risks to the lender.

 

If Carnival felt the need to borrow at that rate, it’s no wonder the shares are being offloaded, dragging the price down. I’ve been holding onto mine, so far, but I’m wavering now.