Explain the Princess Stock Tanking

[cruzsnooze]

I'm not savvy about stock although I have the shares required for the shareholders OBC.  Why has Carnival stock taken such a big loss recently and would you buy or sell right now? Someone who understands the dynamics of the stock market please chime in. 

[clueless2]

Interest rates have been increased and will be increased more to try to slow down economic growth to get inflation under control.  Many believe there will be a recession.  Folks tend to cut back on unnecessary spending during a recession-thus the drop in all cruise line stocks-not just CCL.

 

At least that's the way I see it.

[Honolulu Blue]

56 minutes ago, cruzsnooze said:

I'm not savvy about stock although I have the shares required for the shareholders OBC.  Why has Carnival stock taken such a big loss recently and would you buy or sell right now? Someone who understands the dynamics of the stock market please chime in. 

 

Carnival Corporation owns Princess and several other cruise lines.  

 

There are many, many factors that affect Carnival's stock both on a short-term and a long-term basis.  @clueless2 mentioned some of them.  I could go through those and some others and make a post that's so long nobody would read it and I would STILL be sure to miss some.

 

Here's a short summary:  CCL is suffering because investors and potential investors are less confident than a few months ago that they will make the profits necessary to pay off their debt, restore their dividend, and make long-term investments in their fleet and private destinations.  I have no idea whether to buy or sell/short purely as an investment at the current price, which means it's (probably) fairly valued.

[tcdcruiser]

CCL has in the last couple of years, due to covid, fallen from a high in the mid 60s to the low teens (13.29 today).  IMHO , like me, you have already taken the “hit”.  
 

In time, maybe even after a recession, CCL will rebound.  Plus, if you only own 100 shares like me, $1329 more in your checking account is not going to make you rich. 

Edited May 26, 2022 by tcdcruiser

[riffatsea]

The entire stock market has been down latel,not just Carnival,stock!

Today the stock is up

People are not sure of anything these days

Interest rates,inflation,war,disease, etc make people nervous 

When people are nervous the market goes crazy!

 

[sonomaphil]

2 hours ago, cruzsnooze said:

I'm not savvy about stock although I have the shares required for the shareholders OBC.  Why has Carnival stock taken such a big loss recently and would you buy or sell right now? Someone who understands the dynamics of the stock market please chime in. 

 

Under no circumstances buy CCL stock just for the credits if you are unaware of the risks of owning stocks. 

[NavArch64]

As of Feb 28, 2022, the Carnival Corporation had $2.741 B in short term borrowings, $2.272 B in current portion of long term debt, and $29.887 B in long term debt. This is a total of $34.900 B of debt for Carnival Corporation. Total shareholders equity (book value) on Feb 28, 2022 was $10.311 B. This gives a debt/equity ratio of 3.385. Very highly leveraged particularly at a time when interest rates are rising. It could take a long time to restore the debt/equity ratio to a more reasonable level.

[NavArch64]

As of Feb 28, 2022, the Carnival Corporation had a total of $8.057 B in current assets and $10.920 B in current liabilities for a ratio of CA/CL= 0.738. It could take a long time to restore this ratio to a more reasonable level of 1.0 or greater. 

[tcdcruiser]

We are talking about an existing $1346 equity position. Right?

[wowzz]

33 minutes ago, tcdcruiser said:

We are talking about an existing $1346 equity position. Right?

Yes! For most of us with just 100 shares, variations in the share price are irrelevant.

[franktown]

They have had to continue to borrow money to pay off debt from previous borrowing.  They are currently rated as B1(junk bonds) from Moodys so their borrowing cost are high.  Most of the cruise industry is a long way from recovering.   Buying or selling is a personal decision.  Do your research plenty is available.

[CruiserRob]

Cruise stocks lead S&P declines as cost increases, capacity concerns build | Seeking Alpha

[CruiserRob]

Why Cruise Line Stocks Are Plunging Today | The Motley Fool

[Rick&Jenny]

Simply said, CCL Is crushed by current debt, $35 Billion.  They won’t get any relief or bailouts because they are registered in Panama to avoid taxes and U S regulations. They are underwater and slowly sinking financially.Their future looks murky at best. To get some needed cash, they are contemplating a sale of their Seabourne Lines to some Saudi entity.

[Cenotediver]

5 hours ago, cruzsnooze said:

I'm not savvy about stock although I have the shares required for the shareholders OBC.  Why has Carnival stock taken such a big loss recently and would you buy or sell right now? Someone who understands the dynamics of the stock market please chime in. 

Not sure why it’s tanking but like you I’ve got the required stock ownership to get the OBC for stocks. I bought at 12.00 a share didn’t buy it for investment but for the credit. I’ll get a 250.00 credit for our 16 Hawaiian trip. If you cruise a bit it will pay itself back 

[Steelers36]

The general stock market situation and rising inflation would be indicative of expecting cutbacks in discretionary spending. 

 

Perhaps the market movers and shakers have become aware of lower passenger loads, the fact that many are still cruising on old credits, that service levels stink in response times for both guests and TA's (I gather it was quite the hot topic on the webinar today that John Chernesky used to host.. in that call they talked about servicing issues for voyages up to 30 days out only and others wait unless a house-on-fire.  Quite an admission of inability to cope).  And perhaps there is some more awareness of the MC App disaster which has also affected PCL customer sentiment and ability of their staff to respond (they have WAY more calls and issues due to the numerous App issues - if the App actually worked well for everyone, they could probably lay staff off.. LOL).

 

[VibeGuy]

30 billion in debt for a company that spins out 3 billion a year in profit in a good year.  Of course the markets are killing them.  Their last debt offer priced at 10% interest.  
 

I would absolutely not own CCL or CUK if I didn’t sail frequently enough that the loss on the equity was immaterial.   The OBC + a tax loss is fine. The tax loss alone?  Not fine. 
 

[NavArch64]

In the pre-pandemic fiscal year 2018 (ending 11/30/18), Carnival Corporation reported earnings before interest and tax of $3.4 B. If the corporation were able to return to that level of profitability in the near future - very difficult to achieve - but the interest rate on the $35 B in debt rose to an average of 10% - the corporation would still be unable to service the $3.5 B interest on the debt.  

[NavArch64]

The possible sale of Seabourn to the Saudi investment arm would be the first brand to go. What brand would be next? 

[cruzsnooze]

3 hours ago, sonomaphil said:

 

Under no circumstances buy CCL stock just for the credits if you are unaware of the risks of owning stocks. 

I've already made my investment back with over 50 cruises. Yes I bought it for the OBC and it paid off. My question was for someone who can understand the financials and all the stuff about the stock. 

[cruzsnooze]

3 hours ago, NavArch64 said:

As of Feb 28, 2022, the Carnival Corporation had $2.741 B in short term borrowings, $2.272 B in current portion of long term debt, and $29.887 B in long term debt. This is a total of $34.900 B of debt for Carnival Corporation. Total shareholders equity (book value) on Feb 28, 2022 was $10.311 B. This gives a debt/equity ratio of 3.385. Very highly leveraged particularly at a time when interest rates are rising. It could take a long time to restore the debt/equity ratio to a more reasonable level.

Thank you, that's what kind of explanation a lay person such as myself was looking for. 

[cruzsnooze]

1 hour ago, CruiserRob said:

Why Cruise Line Stocks Are Plunging Today | The Motley Fool

Thank you posting this. It is highly understandable and answers my question directly. 

[sunsetme]

after today's Carnival mess with 2 ships the stock will suffer even more

[Syracusefan44]

Between high fuel costs and ships sailing with in some cases 50% capacity due to ongoing COVID19 concerns the cruise lines are losing millions of dollars every quarter.  

It is so bad that that Carnival Corporation (CCL) is in the process of selling Seabourn to raise capital.  Also the CCL 8K reports to the Securities & Exchange Commission paint a very bleak future for the cruise industry. 

[cruzsnooze]

If the company is having as much difficulty as people state and the stock price reflects that opinion maybe cruising will get smaller and back to being for the wealthier passengers. I hope for the sake of CCL they can maintain their stock prices until they become more profitable. In hindsight they grew too big and too fast.