Carnival Stock Below $10

[At Sea At Peace]

3 hours ago, BlerkOne said:

and in other news

https://www.cruiseindustrynews.com/cruise-news/27776-carnival-cruise-line-to-operate-full-ships-this-summer-at-110-percent-occupancy.html

 

 

Yep, that is out there.

 

I've always like the 110% award trophies, especially the ones given out by the coach to his son or daughter.  😄

 

Yes, the are projecting 110% capacity for their 3rd quarter (3-months ending August 31st).  That is their "summer season."  The need to make a boatload of net income to make it through the 4th quarter and restart a new year December 1st)  However, they are also projecting a NET LOSS for the (greatest 110% on all ships) 3rd quarter.

 

https://www.marketwatch.com/story/carnival-now-expects-3q-loss-positive-adjusted-ebitda-271656078653#:~:text=Carnival%2C the world's largest cruise,expected to end Aug. 31.

 

Be not concerned, they'll deflect to the new talking point (i.e., lipstick) to a new measurement level that we should look to ~ EBITDA should be positive.  LOL. In essence, we won't make money during this massive summer cruise season with 110% capacity "unless we don't count Interest, Taxes, Depreciation and Amortization."  🤥

 

Try that yourself at the bank.  🤣

 

Further, per their recent earnings release, they give ZIP, NADA, ZERO indications for the 4th quarter (3-months ending November 30th; not an overwhelmingly optimistic date range for the travel industry and especially cruise lines).

 

The "tipping point" possibly ahead of continued loss earnings reports is a decrease in historical demand, a reduction in cruise bookings (out of cautions) and erosion of their free Line of Credit; i.e., customer deposits.

 

Reported "liquidity" is $7.5 billion.

 

Comprised of the component "customer deposits" of $5.1 billion.

 

 

[1kaper]

2 hours ago, rjrpar said:

Do you think the crime wave in NYC is affecting Broadway?  Same issue to many people as a large fight on a cruise ship.  We have cruised about 25 times, 5 on Carnival. I will think twice before #6

Broadway?  I don’t know? 
 

is the Carnival fight a crime wave?  
 

We all evaluate risk differently and I am certainly not telling you not to think twice. But personally the way I look at it - in this case it happened later at night (not at 530 am apparently) and alcohol was likely a factor. I don’t know the details but I’ve seen enough drunken fights over the years to know it usually takes two to tango. Not likely a situation I will be in. 

If it were a case of a random person being assaulted for no reason I might be more concerned but even one instance of that over all of the cruises that sail is not a significant risk to me.

Considering the amount of cruises and people on the cruises fights are exceedingly rare. And they are not exclusive to Carnival. Just before I read this someone posted in an MSC group. One person there reported seeing a fight in NCL. I know RC has had fights. 

 

[ontheweb]

22 minutes ago, BlerkOne said:

Cruises to nowhere are illegal.

Actually, that is not true. A cruise line wanting to do a cruise to nowhere legally could, but their crew would need a different type and more expensive to obtain work visa. The PVSA does NOT prohibit cruises to nowhere. 

[Muffin Slayer]

49 minutes ago, 1kaper said:

Broadway?  I don’t know? 
 

is the Carnival fight a crime wave?  
 

We all evaluate risk differently and I am certainly not telling you not to think twice. But personally the way I look at it - in this case it happened later at night (not at 530 am apparently) and alcohol was likely a factor. I don’t know the details but I’ve seen enough drunken fights over the years to know it usually takes two to tango. Not likely a situation I will be in. 

If it were a case of a random person being assaulted for no reason I might be more concerned but even one instance of that over all of the cruises that sail is not a significant risk to me.

Considering the amount of cruises and people on the cruises fights are exceedingly rare. And they are not exclusive to Carnival. Just before I read this someone posted in an MSC group. One person there reported seeing a fight in NCL. I know RC has had fights. 

 

At least they dont like to smash into icebergs like NCL driving with too much fog to see anything 

[mz-s]

Is CCL (the cruise line) profitable? Or is it still losing money as well? I don't know if they specified in their report.

[Illbcruzn4life]

59 minutes ago, BlerkOne said:

Cruises to nowhere are illegal.

There are enough ports without restrictions that there wouldn't be a need for cruises to nowhere.

[CroozFanatic]

1 hour ago, At Sea At Peace said:

 

Yep, that is out there.

 

I've always like the 110% award trophies, especially the ones given out by the coach to his son or daughter.  😄

 

Yes, the are projecting 110% capacity for their 3rd quarter (3-months ending August 31st).  That is their "summer season."  The need to make a boatload of net income to make it through the 4th quarter and restart a new year December 1st)  However, they are also projecting a NET LOSS for the (greatest 110% on all ships) 3rd quarter.

 

https://www.marketwatch.com/story/carnival-now-expects-3q-loss-positive-adjusted-ebitda-271656078653#:~:text=Carnival%2C the world's largest cruise,expected to end Aug. 31.

 

Be not concerned, they'll deflect to the new talking point (i.e., lipstick) to a new measurement level that we should look to ~ EBITDA should be positive.  LOL. In essence, we won't make money during this massive summer cruise season with 110% capacity "unless we don't count Interest, Taxes, Depreciation and Amortization."  🤥

 

Try that yourself at the bank.  🤣

 

Further, per their recent earnings release, they give ZIP, NADA, ZERO indications for the 4th quarter (3-months ending November 30th; not an overwhelmingly optimistic date range for the travel industry and especially cruise lines).

 

The "tipping point" possibly ahead of continued loss earnings reports is a decrease in historical demand, a reduction in cruise bookings (out of cautions) and erosion of their free Line of Credit; i.e., customer deposits.

 

Reported "liquidity" is $7.5 billion.

 

Comprised of the component "customer deposits" of $5.1 billion.

 

 

 

^^ this....liquidity can dry up quickly as customers cancel existing bookings and deposits and refuse to lay down new cash.

 

I think there is a greater than zero chance that THIS report from MS is the death knell - meaning it spirals to its death from this morning. Only time will tell.

[mz-s]

7 minutes ago, CroozFanatic said:

 

^^ this....liquidity can dry up quickly as customers cancel existing bookings and deposits and refuse to lay down new cash.

 

I think there is a greater than zero chance that THIS report from MS is the death knell - meaning it spirals to its death from this morning. Only time will tell.

 

If Carnival Corp dies then I don't see how any cruise line survives.

[ray98]

1 minute ago, mz-s said:

 

If Carnival Corp dies then I don't see how any cruise line survives.

 

The other lines are in much better shape than Carnival.

[mz-s]

Just now, ray98 said:

 

The other lines are in much better shape than Carnival.

 

How did they get through COVID so much easier than Carnival? Simply because they had fewer ships and thus lower fixed costs?

[BlerkOne]

19 minutes ago, ray98 said:

 

The other lines are in much better shape than Carnival.

I'm not sure NCL is. I think they hit an iceberg the other day.

[john91498]

Carnival won't die. If things get too bad, they'll just declare BK to wipe out the debt and do a reorg.

[ray98]

1 hour ago, john91498 said:

Carnival won't die. If things get too bad, they'll just declare BK to wipe out the debt and do a reorg.

 

Well.....this topic is about stock holdings so it is worthy of more than a brush off.

[john91498]

With the way things are going, I wouldn't be surprised if the stock price goes below $5...

[ray98]

5 hours ago, mz-s said:

 

How did they get through COVID so much easier than Carnival? Simply because they had fewer ships and thus lower fixed costs?

 

 

Well.....Carnival has been sliding well before Covid.  Their stock priced reached near $70 a share in mid-2018.  By the time COVID popped up it had lost 40% of its value.  COVID caused a free fall seeing the stock lose 90% of its previous peak.

 

Carnival is a huge company and the shutdown hit them hard.  They had to take billions in high interest debt just to make it through.  Even a year after the restart the debt only continues to grow.  They lost $22 million a day just in the first quarter of 2022 alone.  Their total debt is now $36 billion and it appears even the peak season with goals of 110% occupancy isn't going to turn the tide. 

 

Q3 which is a natural slowdown in the travel season will likely present obstacles Carnival has never seen.  They are simply in bad shape and we haven't even taken into account rising costs and a looming recession.

Edited June 30, 2022 by ray98

[At Sea At Peace]

10 hours ago, john91498 said:

Carnival won't die. If things get too bad, they'll just declare BK to wipe out the debt and do a reorg.

 

Unlike more traditional public companies and debt structures, the cruise lines debt structures are a complex web and tiered secured, unsecured senior and unsecured (general), as well as vendors (fuel contracts, etc.) and the massive, generally unsecured, customer deposits.

 

The debt "web and tiers" vary, some with first secured priority on a ship, group of ships, a private island, and other senior unsecured priority not on a specific asset but on on all other assets.

 

The "company" doesn't control what happens.  The creditors do, and almost universally and historically, the creditors are their to protect the most senior creditors only.  Equity would be gone, with no apparent reality for an aka Equity Committee as their is no prognosis that there is residual assets net of debt and creditor settlement.

 

Where the "mess" comes in is where the creditors line up, by ship, group of ships, private islands, etc., the all other assets.  They have unique, secured positions that prevent other creditors from  touching "their secured ship, group of ships, private islands, etc.).

 

What is NOT CLEAR, but subject to dire outlook, is who (if anyone) will honor customer deposits?

 

The "corporate entity" owns the customer deposits.  The debt, secured as described above, has no claim to such (let's just say) for their ships or groups of ships (possibly by subsidiary line, however).

 

Possibility for some of the most convoluted bankruptcies and/or liquidations since we've seen during the 2008-2010 timeline.

 

The most notable, messy bankruptcies also got "first dibs" on billions of professional fees (ahead of creditors).

[At Sea At Peace]

7 hours ago, ray98 said:

Well.....Carnival has been sliding well before Covid.  Their stock priced reached near $70 a share in mid-2018.  By the time COVID popped up it had lost 40% of its value.  COVID caused a free fall seeing the stock lose 90% of its previous peak.

 

Carnival is a huge company and the shutdown hit them hard.  They had to take billions in high interest debt just to make it through.  Even a year after the restart the debt only continues to grow.  They lost $22 million a day just in the first quarter of 2022 alone.  Their total debt is now $36 billion and it appears even the peak season with goals of 110% occupancy isn't going to turn the tide. 

 

Q3 which is a natural slowdown in the travel season will likely present obstacles Carnival has never seen.  They are simply in bad shape and we haven't even taken into account rising costs and a looming recession.

 

Three very good points.

[mz-s]

7 hours ago, ray98 said:

 

 

Well.....Carnival has been sliding well before Covid.  Their stock priced reached near $70 a share in mid-2018.  By the time COVID popped up it had lost 40% of its value.  COVID caused a free fall seeing the stock lose 90% of its previous peak.

 

Carnival is a huge company and the shutdown hit them hard.  They had to take billions in high interest debt just to make it through.  Even a year after the restart the debt only continues to grow.  They lost $22 million a day just in the first quarter of 2022 alone.  Their total debt is now $36 billion and it appears even the peak season with goals of 110% occupancy isn't going to turn the tide. 

 

Q3 which is a natural slowdown in the travel season will likely present obstacles Carnival has never seen.  They are simply in bad shape and we haven't even taken into account rising costs and a looming recession.

 

I can't fathom how they're still losing to much even while every ship is sailing full. But then I realize there is a lot more to Carnival Corp than just CCL in the US.

[ColeThornton]

This may be a dumb question but I'm going to ask anyway because Lord knows it wont be the first time.  🙂

 

Can a U.S. stock actually go down to $0 without the company going in to bankruptcy?   Or, would the SEC step in when it gets to a certain level like $1 or $2 and stop public trading on it?

 

Thanks!

 

 

[Tom-n-Cheryl]

At a buy-in of ~$800+ for the credit presently, I feel that they might want to suspend the shareholder's credit. I don't think they should be giving money away at this point - and I doubt it's really a big factor in prompting people to make bookings.

 

Do I enjoy getting the OBC? Sure...

 

Tom

[At Sea At Peace]

12 minutes ago, ColeThornton said:

This may be a dumb question but I'm going to ask anyway because Lord knows it wont be the first time.  🙂

 

Can a U.S. stock actually go down to $0 without the company going in to bankruptcy?   Or, would the SEC step in when it gets to a certain level like $1 or $2 and stop public trading on it?

 

Thanks!

 

 

 

Well, IANAL, but follow the progression of what happens "on the way down."

 

Stock values generally aren't causal to bankruptcy though they can indicate the markets determination that such might be in the offing.  The first bankruptcy threshold they face are likely embodied in the "covenants" on their debt and leases; such as performance, financial ratios, liquidity levels, etc. spelled out in their debt agreements and the inability of the company to "strike a new or modified deal" when they have "fallen out of covenant compliance."  Less likely is an unpaid vendor aka Crystal ships seized for unpaid fuel bills (which was pretty rare) setting off other events faster like dominoes.

 

In the meantime, for the stockholder to watch when share prices that drop fast and get below the $5 and $1 per share thresholds.  That triggers "a bunch of potentials."

 

Institutions, pensions, mutual funds, etc. may have provisions whereby they are self-limited from investing (owning stock) in such companies.  It's a double whammy potential in that as the $5 threshold approaches and actually hits, those with such restrictions could force a VOLUME SELLOFF to meet their own requirements which can magnify the price drop.

 

Also, listed on the NYSE, the is a 30-day rolling average measurement of under $1 RISKS DELISTING from the NYSE.  A company could then move over to the OTC markets (pink sheets).

 

Again, IMO, IANAL.  😉

 

 

[ontheweb]

3 hours ago, Tom-n-Cheryl said:

At a buy-in of ~$800+ for the credit presently, I feel that they might want to suspend the shareholder's credit. I don't think they should be giving money away at this point - and I doubt it's really a big factor in prompting people to make bookings.

 

Do I enjoy getting the OBC? Sure...

 

Tom

Why suspend something that is a marketing tool and costs them practically nothing? There was the same sort of speculation when Covid first started affecting cruise line stock that the shareholders OBC would be suspended or at least the amount of shares needed to obtain it would double. Instead the last time the Carnival Corporation Board of Directors met, they extended it 2 years instead of the usual 1 year. 

[ew101]

3 hours ago, mz-s said:

 

I can't fathom how they're still losing to much even while every ship is sailing full. But then I realize there is a lot more to Carnival Corp than just CCL in the US.

Occupancy was expected to be pushing up toward 70% across the entire global CCL owned fleet this last quarter.  Which is still slightly below the new, 2022 breakeven- around 80%.  The magical "over 100%" thing starts when all the cabins are sold- hence the $25 offers.  Why would they get rid of the shareholder benefit?   Every booking raises occupancy, pays into the tip pool (hopefully) and makes onboard purchases.  The food was ordered six weeks ago, the fuel is already paid for and crew wages are already contracted.  

Wars, illness, flight cancellations and inflation are headwinds.  

[Tom-n-Cheryl]

35 minutes ago, ontheweb said:

Why suspend something that is a marketing tool and costs them practically nothing? There was the same sort of speculation when Covid first started affecting cruise line stock that the shareholders OBC would be suspended or at least the amount of shares needed to obtain it would double. Instead the last time the Carnival Corporation Board of Directors met, they extended it 2 years instead of the usual 1 year. 

 

That's just my initial take on things - playing checkers in a chess world no doubt, LOL

 

Tom

[Illbcruzn4life]

2 hours ago, ew101 said:

Occupancy was expected to be pushing up toward 70% across the entire global CCL owned fleet this last quarter.  Which is still slightly below the new, 2022 breakeven- around 80%.  The magical "over 100%" thing starts when all the cabins are sold- hence the $25 offers.  Why would they get rid of the shareholder benefit?   Every booking raises occupancy, pays into the tip pool (hopefully) and makes onboard purchases.  The food was ordered six weeks ago, the fuel is already paid for and crew wages are already contracted.  

Wars, illness, flight cancellations and inflation are headwinds.  

where does one get the information on what the break even point is? Your reply says around 80% while wheres walter said around 35% which I think is way to low but since I have no idea where to gain the information I'd thought I'd ask.