Carnival Stock Below $10

[loge23]

Carnival is borrowing more money to pay off the existing debt, basically.

That they were apparently asked (or forced) to hock 12 of their vessels is an ominous sign.

This is sort of like a hamster's wheel finance equivalent - lots of action here, fun to watch, event the markets are engaged (stock modestly up today), but the hamster isn't getting anything but a good workout. 

Another analogy would look like the Carnival brass throwing as much as possible overboard to keep the ship from sinking in the hope that the breach in the hull will magically repair itself. 

Financiers are along for the ride - they'll take a flyer on the company figuring out the most favorable outcomes to limit the losses. But it's difficult to see a return to positive cash flow with the current debt load.  

[cruisingguy007]

1 hour ago, SCBarker said:

So Carnival Corp put up 12 vessels to Carnival Holdings to raise money to pay down upcoming debt?

 

https://finance.yahoo.com/news/carnival-corporation-plc-announces-offering-114400398.html

 

Go for broke, not a hard decision when your back is against the wall. Does make you wonder how long they can keep this up though. Oddly enough, the stock has been rising, go figure.   

[tidecat]

Carnival has $991 million in debt to pay back this quarter, followed by $2.377 billion to pay back in fiscal 2023. At the very least this kicks the can on the remaining FY 2022 debt to 2028.

 

Depending on how the revolving credit line is set up, this may also be cheaper debt than borrowing it off the credit line.

 

Fiscal Years 2024 (if their revolving credit line doesn't get renewed), 2025, and 2026 all have $4 billion or more in maturities. Even if Carnival posts $3B in net income with EBITDA pushing $5B and invests in nothing (which won't be the case as Queen Anne and a Princess ship will enter service in 2024 and 2025), those are going to be tough to pay down. We may be looking at 2030 or later before debt returns to historical levels.

[loge23]

1 hour ago, tidecat said:

Depending on how the revolving credit line is set up, this may also be cheaper debt than borrowing it off the credit line.

The refi is being tauted by corporate as saving the company over $100 million in interest, so your take is correct.

Still, significant headwinds for the line. We can't forget Porter's Five Forces model when assessing the viability of this business. Not only is Carnival facing a debt crisis, but they are also still in a fiercely competitive industry. Yes, some of the big competitors are also "underwater" financially, but not as severe as Carnival - and let's face it, the industry will survive with or without some of the current players. We're seeing new players too - Virgin being one example. 

There have been numerous reports of stock-outs on some of Carnival-brand ships. Are some suppliers getting nervous? 

Demographical changes are also a factor, particularly for Carnival subs like Holland and Princess. Is there enough differentiation between these lines or is brand consolidation a possibility? They're actively promoting a younger vibe, but have they attracted a younger consist? Are they losing their traditional customers to the smaller ship firms (Oceania, Viking Ocean, Regent etc.)? Are the ships just too big and are there just too many of them? All these factors are issues for this company going forward.

 

[cruisingguy007]

3 minutes ago, loge23 said:

The refi is being tauted by corporate as saving the company over $100 million in interest, so your take is correct.

Still, significant headwinds for the line. We can't forget Porter's Five Forces model when assessing the viability of this business. Not only is Carnival facing a debt crisis, but they are also still in a fiercely competitive industry. Yes, some of the big competitors are also "underwater" financially, but not as severe as Carnival - and let's face it, the industry will survive with or without some of the current players. We're seeing new players too - Virgin being one example. 

There have been numerous reports of stock-outs on some of Carnival-brand ships. Are some suppliers getting nervous? 

Demographical changes are also a factor, particularly for Carnival subs like Holland and Princess. Is there enough differentiation between these lines or is brand consolidation a possibility? They're actively promoting a younger vibe, but have they attracted a younger consist? Are they losing their traditional customers to the smaller ship firms (Oceania, Viking Ocean, Regent etc.)? Are the ships just too big and are there just too many of them? All these factors are issues for this company going forward.

 

 

Some excellent points, I really do think Carnival has a great product that is attractively priced. They just need to re-brand as affordable upscale cruising and not be seen as the bottom rung. Royal offers a nearly identical product and some view it as a more upscale product, this helps command higher fares. Carnival is a much bigger player and already has some things going for it, great crews, newer ships, lots of drive to ports, family friendly, good included dining options etc, it just needs some image tweaks and small improvements in particular areas. They have all the right stuff to be one of the last man standing (so to speak).  

[Ombud]

19 minutes ago, cruisingguy007 said:

 

Some excellent points, I really do think Carnival has a great product that is attractively priced. They just need to re-brand as affordable upscale cruising and not be seen as the bottom rung. Royal offers a nearly identical product and some view it as a more upscale product, this helps command higher fares. Carnival is a much bigger player and already has some things going for it, great crews, newer ships, lots of drive to ports, family friendly, good included dining options etc, it just needs some image tweaks and small improvements in particular areas. They have all the right stuff to be one of the last man standing (so to speak).  

Carnival Corp certainly has brands that span the affordability / luxury spectrum: Seabourn - Cunard - Princess - HAL - PO - PO Australia - AIDA - Costa - Carnival

[ray98]

37 minutes ago, cruisingguy007 said:

 

Some excellent points, I really do think Carnival has a great product that is attractively priced. They just need to re-brand as affordable upscale cruising and not be seen as the bottom rung. Royal offers a nearly identical product and some view it as a more upscale product, this helps command higher fares. Carnival is a much bigger player and already has some things going for it, great crews, newer ships, lots of drive to ports, family friendly, good included dining options etc, it just needs some image tweaks and small improvements in particular areas. They have all the right stuff to be one of the last man standing (so to speak).  

 

Unfortunately Carnival has done more damage to their brand since the restart than they can fix in a decade.  The recent poor behavior on ships has been shared far and wide with ease on social media.  I have many friends and co-workers who are not even cruisers mention it to me when the topic comes up that I am leaving for cruise vacation.  I also have a few friends who routinely cruise who are avoiding Carnival at this point.  It has really taken up a life of its own.

Edited October 18, 2022 by ray98

[BlerkOne]

4 hours ago, SCBarker said:

So Carnival Corp put up 12 vessels to Carnival Holdings to raise money to pay down upcoming debt?

 

https://finance.yahoo.com/news/carnival-corporation-plc-announces-offering-114400398.html

They didn't put up any vessels. The bonds are unsecured.

[cruisingguy007]

1 minute ago, Ombud said:

Carnival Corp certainly has brands that span the affordability / luxury spectrum: Seabourn - Cunard - Princess - HAL - PO - PO Australia - AIDA - Costa - Carnival

 

The luxury sector is one that I see being the toughest to maintain, there are already deep discounts showing up across the board pretty much. With the economy as it is and wealth concentration only continuing, there may be a lot less passengers willing to spend extravagantly or even excessively. Sure there will be those who will be minimally effected and maybe even a small sub-set who are willing to pay more for less crowded conditions and covid concerns  but the broader market will be looking for value added, especially if things fall off the cliff (which some predict will happen). We also have the election that will sway public sentiment and could move markets, if one side wins it could improve conditions in the short-term but historically is known for causing recessions, on the other hand, sentiment could turn down in the short term if the other side of the coin wins but yield a different result long-term. With all the uncertainty, Carnival just may be in the perfect spot when folks start questioning their spending. Carnival delivers the best bang for your buck IMO and that is a great place to be during times of uncertainty. The other brand  positions are a nice bonus that gives you something to work with.        

[Ombud]

I can't address Carnival issues but behavior issues on Princess has been restricted to just a few horrible cruisers. Maybe the brig isn't big enough?? No real issues on Cunard

[cruisingguy007]

4 minutes ago, ray98 said:

 

Unfortunately Carnival has done more damage to their brand since the restart than they can fix in a decade.  The recent poor behavior on ships has been shared far and wide with ease on social media.  I have many friends and co-workers who are not cruisers mention it to me when the topic comes up that I am leaving for cruise vacation.

 

People have short-term memories and when it comes down to brass tacks and folks are comparing apples-apples, saving money or getting more value for it are all that matters in the end. It's definitely a concern though if people "feel" unsafe, even if they actually aren't. That can hurt for a while to be sure.  

[BlerkOne]

4 hours ago, loge23 said:

Carnival is borrowing more money to pay off the existing debt, basically.

That they were apparently asked (or forced) to hock 12 of their vessels is an ominous sign.

 

They didn't hock anything. The bonds are not for sale in the US. They are issued by a foreign subsidiary of Carnival. Carnival is transferring some ships to the holding company so there will be assets on their books. The ships will continue to sale under various Carnival companies. It is actually quite brilliant.

[BermudaBound2014]

They upped the offering  to 2 Billion. At 10.28% with a call date of 2025. 
 

OH my …. The pressure 

 

 

Edited October 19, 2022 by BermudaBound2014

[bucfan2]

13 minutes ago, BermudaBound2014 said:

They upped the offering  to 2 Billion. At 10.28% with a call date of 2025. 
 

OH my …. The pressure 

 

 

For sure. Unfortunately, desperate times call for desperate measures. 

[Illbcruzn4life]

6 hours ago, BlerkOne said:

They didn't hock anything. The bonds are not for sale in the US. They are issued by a foreign subsidiary of Carnival. Carnival is transferring some ships to the holding company so there will be assets on their books. The ships will continue to sale under various Carnival companies. It is actually quite brilliant.

Was that a freudian slip? The ships will continue to “SALE”….,

[Ombud]

JMHO Carnival has gone a long way in improving their brand by initiating & making a $500 fine for abusive behavior. Plus its miniscule reimbursement for the costs involved in security time. Hand those out, let it be posted online, then watch ppl pull their horns in. But in reality there's also car-wars, neighborhood-wars, store-wars, etc

[icft]

9 hours ago, Ombud said:

JMHO Carnival has gone a long way in improving their brand by initiating & making a $500 fine for abusive behavior. Plus its miniscule reimbursement for the costs involved in security time. Hand those out, let it be posted online, then watch ppl pull their horns in. But in reality there's also car-wars, neighborhood-wars, store-wars, etc

Just my opinion... I think the announcement of the $500 fine is a small net negative for Carnival.

 

Those who have sailed carnival will know Carnival does not enforce many of its rules. So this announcement will mean little to them, though it may raise some hope and keep some on the verge of leaving waiting to see if this rule is enforced. I doubt it will be enforced with the result being the announcement just delayed customer loss.

 

For some who have not sailed Carnival this will be the first they have heard that there is a problem. The announcement will be a negative with those folks as they are now aware of a problem they did not previously know about. Most of those who have not sailed Carnival will never see the announcement.

 

Unless Carnival publicizes cases where the fine, or worse, was imposed they will have only kept a few current customers staying a bit longer and warned off some potential new customers. If they actually intend to enforce the penalty they would have been better off just changing the cruise contract and enforcing the threats.

 

 

[BlerkOne]

Just now, icft said:

 

Unless Carnival publicizes cases where the fine, or worse, was imposed they will have only kept a few current customers staying a bit longer and warned off some potential new customers. If they actually intend to enforce the penalty they would have been better off just changing the cruise contract and enforcing the threats.

 

 

Why should they? Just fine a few people and there will be 500 threads about it.

 

The cruise contract already states they can put you off the ship for contract violations. Several include $500 fines, including this one

 

(k) Consistent with our commitment to safety, disruptive behavior will not be tolerated and any guest whose conduct affects the comfort, enjoyment, safety or well-being of other guests or crew will be detained onboard and/or disembarked at their own expense and will banned from sailing on Carnival in the future. Any violation of this clause may result in a fine to the Guest in the amount of $500 and reimbursement of expenses incurred by Carnival as a result of the detainment or disembarkation.

[Ombud]

3 minutes ago, BlerkOne said:

expenses incurred by Carnival as a result of the detainment or disembarkation.

Why couldn't they just put them off at the next port and let them find their own way home? Could be interesting if that port was not in their home country & they were cruising under WHTI (birth cert instead of passport)

 

I'm not sympathetic 

 

 

Edited October 20, 2022 by Ombud

[ontheweb]

10 hours ago, BlerkOne said:

Why should they? Just fine a few people and there will be 500 threads about it.

 

The cruise contract already states they can put you off the ship for contract violations. Several include $500 fines, including this one

 

(k) Consistent with our commitment to safety, disruptive behavior will not be tolerated and any guest whose conduct affects the comfort, enjoyment, safety or well-being of other guests or crew will be detained onboard and/or disembarked at their own expense and will banned from sailing on Carnival in the future. Any violation of this clause may result in a fine to the Guest in the amount of $500 and reimbursement of expenses incurred by Carnival as a result of the detainment or disembarkation.

HA! HA! You are funny, 500 threads about it, so what. What percentage of Carnival's passengers do you think actually participate or even read these forums?

[Retiredmedic]

1 hour ago, ontheweb said:

HA! HA! You are funny, 500 threads about it, so what. What percentage of Carnival's passengers do you think actually participate or even read these forums?

I'm willing to be about 0.0001 percent of Carnival cruisers on CC.

[BlerkOne]

3 hours ago, ontheweb said:

HA! HA! You are funny, 500 threads about it, so what. What percentage of Carnival's passengers do you think actually participate or even read these forums?

A better question might be how many participants in this forum cruise on Carnival?

[Ombud]

24 minutes ago, BlerkOne said:

A better question might be how many participants in this forum cruise on Carnival?

I have cruised on Carnival (with kids) but now Princess. Both divisions in Carnival Corp 

[ontheweb]

4 hours ago, Retiredmedic said:

I'm willing to be about 0.0001 percent of Carnival cruisers on CC.

I don't know if that is the number, but I do agree that it is very small. (I am the one who first asked the question with the implication that it is very small.)

[ontheweb]

1 hour ago, BlerkOne said:

A better question might be how many participants in this forum cruise on Carnival?

That would be irrelevant to what percentage of Carnival cruisers post on this forum.