KABOOM!! Seabourne to Saudis?? CEO out

[LocoLoco1]

Carnival CCL all the news on CNBC this morning. Stock at $9/bucks, Mgmt changes at the top and the Saudis eyeing Seabourne for 1$Billion. Well, well well, eh?

[Mary229]

Could you elaborate?  It is unclear what real news there is from your post

 

the new CEO was announced months ago

Edited June 29, 2022 by Mary229

[KeepSailing]

Morgan Stanley changed price target to $7 and Barron's article says bear case scenario of CCL stock going to zero if too many passengers pull deposits.  I would just suggest anyone thinking of buying CCL stock to get the "stock owner discount" to be careful - drop in stock price could more than wipe out any savings.

Edited June 29, 2022 by KeepSailing
typo

[GlennG]

8 minutes ago, KeepSailing said:

Morgan Stanley changed price target to $7 and Barron's article says bear case scenario of CCL stock going to zero if too many passengers pull deposits.  I would just suggest anyone thinking of buying CCL stock to get the "stock owner discount" to be careful - drop in stock price could more than wipe out any savings.

I agree with your comments.  CCL stock is now trading below $9.00 and given the current challenges in the market, it is not unrealistic to assume that the stock will continue to decline.  It's the perfect storm for Carnival Cruise Lines and the cruising industry.  COVID and "out-of-control" inflation have made things incredibly difficult for the current leadership of Holland America Line and CCL.

[LocoLoco1]

12 minutes ago, Mary229 said:

Could you elaborate?  It is unclear what real news there is from your post

 

the new CEO was announced months ago

What’s new for me is: Today, June 29th,  the NewYork analysts (MorganStanley)and pundits went further than previously. With CCL at $8.50/sh now the talk includes such things as, ‘$30/Billion Net debt unsustainable’ and ‘Bear market case for Share $Price$ of Zero’.  ‘Hedged Fuel Costs for 2023 may be big trouble’.  I still cruise, but pay only with a CreditCard. 

[Mary229]

Just now, LocoLoco1 said:

What’s new for me is: Today, June 29th,  the NewYork analysts (MorganStanley)and pundits went further than previously. With CCL at $8.50/sh now the talk includes such things as, ‘$30/Billion Net debt unsustainable’ and ‘Bear market case for Share $Price$ of Zero’.  ‘Hedged Fuel Costs for 2023 may be big trouble’.  I still cruise, but pay only with a CreditCard. 

Well I don’t consider punditry news especially as concerns the market.   I would be willing to wager that most of us on this board own our mandatory 100 shares to earn our OBC and many of us have paid that out years ago.  
 

I don’t buy anything anymore except with a credit card. 

[iancal]

I cannot imagine NOT paying for any large purchase, travel or otherwise, with a credit card.  

 

The other proviso is not paying too far in advance.  Understand your credit card issuer rules when it comes to challenging a credit card charge.

 

Some Crystal cruisers got burnt badly on both.  Those who converted pre payments  to FCC's we no longer covered by their credit card protection.

 

[HappyInVan]

I was afraid of that. Sooner or later, someone has to say that the king has no clothes.

 

Fortunately, I've no FCC outstanding with any cruise company. And, I've only one booking with a paid FP. Fingers crossed! 😎

[iancal]

I certainly would not be converting any prepaids to FCC these days.  On any cruise line. 

 

I view FCC's as a bit of a trap...despite the discount or bonus that may  be applied.

 

Nor would I be buying any discounted gift cards on any cruise line.

[carlmm]

Thanks fir all the informatuon!

[Sir PMP]

With a stock on its way to zero, changes need to happen. Thanks to Monsanto(Donald) and Coca Cola (Orlando) for ruining a great company.

[BermudaBound2014]

3 hours ago, LocoLoco1 said:

Carnival CCL all the news on CNBC this morning. Stock at $9/bucks, Mgmt changes at the top and the Saudis eyeing Seabourne for 1$Billion. Well, well well, eh?

 

The discussion about Seabourn to Saudi Sovereignty was leaked on May 24th. Nothing new since then besides Arnold Donald stating on the record that CCL would consider selling off brands.

https://www.maritime-executive.com/article/cnbc-carnival-is-exploring-sale-of-seabourn-to-saudi-investors

 

Management Changes were announced last February. They go into effect August 1st.

 

Morgen Stanley lowering to $7 is a hit. I suspect the news headline of stock being worth zero in a 'worse case scenario" moved the stock to the 52 week low this morning. It's still trading in the 8's. I believe this stock would have hit $7 with the abysmal financial release last Friday, but the market was in an upswing that day.

 

Perhaps the adjustment is a result of deeper analysis of the quarterly release. This company is 35Billion (with a B) dollars in debt and climbing. Interest rates are a killer here. I do not believe it is alarmist to suggest using all FCC's asap and withholding new deposits until immediate sailings. Better safe than sorry. No one knows how this will pan out.

 

"Morgan Stanley analysts slashed their base case price target to $7, according to Bloomberg, and maintained an Underweight rating on the stock. In a worst, or “bear case” scenario, Carnival’s (ticker: CCL ) price could reach zero, they added." https://www.barrons.com/articles/carnival-cruise-stock-price-target-cut-51656504056

 

PS: None of the cruise lines are in much better shape. I personally believe NCLH is worse off at the moment. 

 

Edited June 29, 2022 by BermudaBound2014

[LocoLoco1]

Methinks HUGE investors sometimes simply ‘Buy n Hold’ far too long, misleading peons like me as to what fair market value actually is. How odd I can’t use up my FCC’s before Dec 31st. on a cruise I care to go on account yet more cancellations, and I’m not alone. Hard to say what yet another year of this volatility will yield. (Pun intended..)

[Hlitner]

You have to love the usual "blame game" we see in some posts.  I am not going to blame Arnold Donald or other cruise line CEOs for circumstances that have largely been out of their control.  They certainly did not ask for COVID, did not impose the worldwide restrictions, close the ports, frighten off customers, etc.  Stuff happens and if we want to play the blame game with COVID we could certainly make a case to slam many governments around the world for imposing draconian restrictions that generally did little good other than to devastate much of the world's economy.

 

We now have a near perfect storm aligned against the entire cruise industry.  Big increases in fuel costs, big increases in food costs, the difficulty in moving crew around the world mostly due to inefficient government operations (and the issuing of Visas), the complete mis management of the airline industry (and the governments poor planning in terms of air traffic controllers), inflation caused by governments spending money they do not have, recession (fear and reality) mostly caused by government overspending very poor government COVID policies, etc. etc.  So there is the Econ 101 lecture based on facts....not the usual blame game that generally catches innocent folks in the web while deflecting attention from those who are really to blame.

 

What has happened has happened and the harm has been done.  The question now is how will the cruise industry recover and I fear there is going to be a lot of pain before we move back to a healthy cruise and travel industry.  And for those who like to play the "blame game" perhaps they need to look inwards at their own travel/cruise and spending habits.  For those who want to help the cruise industry go book a cruise and actually go on the voyage!  

 

Hank

[AFNavigator]

20 minutes ago, Hlitner said:

We now have a near perfect storm aligned against the entire cruise industry.  Big increases in fuel costs, big increases in food costs,...

It seems very surprising that cruise lines have yet to reimpose fuel surcharges.  Airlines certainly have implemented fuel surcharges indirectly by significantly raising airfares.  Hotels certainly are passing on their higher costs by raising rates.  It's pretty much happening across the travel industry.

Cruise passengers wouldn't like fuel surcharges but most probably would begrudgingly understand the reasoning behind the surcharges.

[Hlitner]

15 minutes ago, AFNavigator said:

It seems very surprising that cruise lines have yet to reimpose fuel surcharges.  Airlines certainly have implemented fuel surcharges indirectly by significantly raising airfares.  Hotels certainly are passing on their higher costs by raising rates.  It's pretty much happening across the travel industry.

Cruise passengers wouldn't like fuel surcharges but most probably would begrudgingly understand the reasoning behind the surcharges.

So we go back to our Econ 101 Class :).  There is a well established economic theorem called "price elasticity."  The concept is actually very simply and expressed (in math terms) how much one can increased prices before folks simply say "no" and take their business elsewhere.  Right now, most cruise ships are operating at a fraction of their capacity with many vessels only selling about 60% (give or take) of their berths.  We know this by simply following many of the CC blogs.  Adding a fuel surcharge is certainly not going to help fill ships and may well drive away enough business to actually contribute to greater losses.  

 

We have noticed some pretty hefty price increases with several lines that we routinely monitor.  Consider that MSC's Yacht Club cost about $300 per passenger day (pre COVID) and is now generally selling at over $400 per passenger day.  Look at the Retreat suites of Celebrity and you will get sticker shock (ultra luxury lines are often less expensive).  I think the cruise lines are testing price increases and it will be interesting to see if those increases hold, or if the lines are forced to go back to some of their old strategies including quietly marketing last minute bargain fares.  

 

Hank

[friendswithdave]

Continuing the Econ 101 theme - supply currently exceeds demand at this time. Price increases by one line cause customers to move to another line. I heard that there are currently more ships at sea now than before the pandemic. This excess supply will continue to prevent price increases by the industry. Good for consumers, bad for cruise companies. We are taking our first post-pandemic cruise soon and I can see us doing more in the next few years if prices stay low.

[CruiserBruce]

36 minutes ago, friendswithdave said:

Continuing the Econ 101 theme - supply currently exceeds demand at this time. Price increases by one line cause customers to move to another line. I heard that there are currently more ships at sea now than before the pandemic. This excess supply will continue to prevent price increases by the industry. Good for consumers, bad for cruise companies. We are taking our first post-pandemic cruise soon and I can see us doing more in the next few years if prices stay low.

There are NOT more ships at sea today as opposed to prior to Covid. Many cruise lines decreased their fleets (HAL by 4 ships) and one HAL ship has not yet returned to service (Volendam). Carnival retired a number of older ships.

 

Some might say there are more BERTHs at sea, but I doubt that is true either. Yes, a small number of new ships came into service during Covid(including one by Disney today)...that may play into the "more berths" concept, but not the idea there are more ships.

 

Is there more supply than demand? It would appear so, as people are not fully comfortable sailing yet. But there is lots of indication that situation is headed towards a more favorable balance.

[AFNavigator]

29 minutes ago, friendswithdave said:

Continuing the Econ 101 theme - supply currently exceeds demand at this time. Price increases by one line cause customers to move to another line. I heard that there are currently more ships at sea now than before the pandemic. This excess supply will continue to prevent price increases by the industry. Good for consumers, bad for cruise companies. We are taking our first post-pandemic cruise soon and I can see us doing more in the next few years if prices stay low.

With the over-supply concept in mind, it probably won't be a stretch to see more ship sell offs after the busy summer season wraps up.  CCL holdings still has a lot of late 90s/early 2000's ships out there in in its fleets that could be sold off without having to merge or divest HAL.  Unfortunately, the Volendam and Zaandam might be ripe for the picking.  The Zaandam might get saved for a while because of its world cruises but the Volendam might be especially vulnerable.  I would think the remaining 3 CCL Fantasy class ships would be very vulnerable too (the Ecstasy is already marked for divestment in October) as well as one or more Princess or overseas cruise line ships. 

[albingirl]

Well, with inflation hitting all of us at the gas pump, supermarket, any purchasing at all, it's not surprising that industries like Carnival Corp. are facing future difficulties.  It's easy to say, oh just take a cruise, but there are many who cannot do that right now.  Baby needs shoes and all that.

 

[albingirl]

Plus, off topic, did you see that brawl on Carnival this week.  Another nail in the coffin, so to speak.

[rkacruiser]

2 hours ago, Hlitner said:

Stuff happens and if we want to play the blame game with COVID we could certainly make a case to slam many governments around the world for imposing draconian restrictions that generally did little good other than to devastate much of the world's economy.

 

Your entire post is excellent.  Covid caught the the entire world with "its pants down" and no government, company, or even "We, the People" reacted in a rational, intelligent manner.  We remain paying the price for that.  And, we will be doing so for a few more years, I believe.  

 

Regarding the CCL price drop, the analyst at Morgan Stanley has been negative on CCL for some time.  I am a MS client with CCL in my account.  My advisor has not been calling me about this, ringing alarm bells.  What does that tell me?  

 

The Market is spooked.  

 

6 hours ago, BermudaBound2014 said:

PS: None of the cruise lines are in much better shape. I personally believe NCLH is worse off at the moment. 

 

That is what I think.  And, have thought for many years.  Have never held a position in NCLH while holding positions in CCL and RCL.  The only adjustment that I ever made was in RCL when it approached its low.  Bought more as the upswing began and have benefited from that strategy.  My plan is to due the same with CCL.  But, I don't think the time is just right yet.  

 

2 minutes ago, AFNavigator said:

The Zaandam might get saved for a while because of its world cruises

 

To the best of my knowledge, the Zaandam is not scheduled for the 2023 World Cruise.  It's the Zuiderdam that will sail that itinerary.  

 

2 minutes ago, albingirl said:

It's easy to say, oh just take a cruise, but there are many who cannot do that right now.  Baby needs shoes and all that.

 

Very true.  Yet, my understanding is that many savings accounts are well filled.

The question is, if this is true, how will the owners of those accounts choose to use their funds?  For the first time in a few years, July 1, the fellow participants and me in our retirement program will an increase in our COLA of a whopping 2% in our payment.  I filled up my gas tank this afternoon.  I spent 53% of that whopping increase in my benefit for July.  

 

4 minutes ago, albingirl said:

Plus, off topic, did you see that brawl on Carnival this week.  Another nail in the coffin, so to speak.

 

So what?  How many videos have I seen this year that show fights/brawls in airports and on planes?  Yet, people are still flying.  

[AFNavigator]

1 minute ago, albingirl said:

Plus, off topic, did you see that brawl on Carnival this week.  Another nail in the coffin, so to speak.

It certainly builds on the image of Carnival being a rowdy spring break booze cruise crowd.  That's exactly what some prospective cruisers want...not me.  I had a guy in my office last fall that was concerned that the 15 drink "Cheers" package on his Carnival cruise was going to be inadequate.  He might think the brawl was OK.

[Mary229]

It is beyond me why any serious investor would give so much regard to a single analyst upgrade or downgrade.  

[rkacruiser]

3 minutes ago, Mary229 said:

It is beyond me why any serious investor would give so much regard to a single analyst upgrade or downgrade.  

 

One needs to get information from a variety of sources.  Mix that with what is learned about financial management and investing and the company's history.  And, then, make a decision on what to do based on what that equation equals.  It's complex.  It's like what I found Algebra to be when I was a high school Freshman.