What happens if the stock drops to $0.00

[ALWAYS CRUZIN]

I hold a lot of Carnival and Royal stock. If the stock does end up at zero. What do you do with it? Just hold on to it and hope it goes backup? Or what?

[Schoifmom]

https://marketrealist.com/p/what-happens-if-a-stock-price-goes-to-zero/

 

It is not highly likely that CCL stock will drop that far.  It is likely that it will continue to drop as demand for the stock shrinks, but IMHO, will rebound over the long haul.

[crewsweeper]

If it goes to zero, the company is bankrupt.  No assets.  Nothing to value. Could revert to a private company.

 

Can it go lower than $6.37?  yes.  But as long as there are assets owned that can have a value for shares outstanding, it will carry a price.   Most likely the stack will become a candidate for takeover.  

But if a stock is under $1 for more than 30 days it's in danger of delisting from the exchange. (Company has 6 months to bring it back above $1).  

 

Most likely a company will hang around for a long time at pennies or fractions.   GT Advanced Technologies was valued at 2 cents a share for years before it rebounded.

[pieter&sharon]

Buy!

[cruisingguy007]

Most of the analytics I read predict it wont go much further down than $2.50-$3.50. I don't see it going to zero. 

[cruisingguy007]

1 hour ago, ALWAYS CRUZIN said:

I hold a lot of Carnival and Royal stock. If the stock does end up at zero. What do you do with it? Just hold on to it and hope it goes backup? Or what?

 

Sell it and tax loss harvest. There are much better bets out there than waiting around for a decade with hopium. Book the loss and keep it moving.  

[IntrepidFromDC]

1 hour ago, ALWAYS CRUZIN said:

I hold a lot of Carnival and Royal stock. If the stock does end up at zero. What do you do with it? Just hold on to it and hope it goes backup? Or what?

As Cramer would say BUY BUY BUY!  It's more likely that Carnival would file for bankruptcy (reorg) than for the stock to go to zero.  The price of a stock is the last transaction price and who would sell shares at zero?

 

In all seriousness, I had Lehman shares when it went bankrupt and although the stock was "worthless" I waited four years with a strange ticker in my brokerage account (something like "LHM##") and wound up getting paid something like $17.

 

If it goes to zero and you want to sell, I'll buy all of it.

[chengkp75]

57 minutes ago, crewsweeper said:

If it goes to zero, the company is bankrupt.  No assets.  Nothing to value. Could revert to a private company.

No, it's not.  It still has assets (ships and buildings).  Those don't disappear when the stock goes to zero.  The shareholders lose everything, but a zero share price does not really affect the daily operation of the company.  The company does not have to redeem shares, and never gain money or lose money when share prices go up or down.  The only time the company gets money from stock shares is when the share is first issued.  Share price is never part of the company's annual balance sheet.  Shareholders have no claim to company assets unless the board decides to declare bankruptcy (it is not a mandatory action when the share price reaches zero, but the shareholders can vote for bankruptcy), at which time creditors get first crack at the assets, and then the shareholders.

[chengkp75]

Anyone who bought cruise line shares for any other reason than buying the minimum for shareholder benefits has always been taking a large risk.  Shipping companies, of any type, are one disaster away from folding.  The ROI on cruise industry stocks is decidedly middle of the road, there are many better investments out there than shipping stocks.

[LocoLoco1]

4 minutes ago, chengkp75 said:

Anyone who bought cruise line shares for any other reason than buying the minimum for shareholder benefits has always been taking a large risk.  Shipping companies, of any type, are one disaster away from folding.  The ROI on cruise industry stocks is decidedly middle of the road, there are many better investments out there than shipping stocks.

Always appreciate your intelligent remarks. QUESTION: So.. if CCL can pay it’s bills, then the ‘FatCat’ investors/funds that $own$ most of CCL’s stock will glumly let the market determine it’s dismal value nearly forever and tell the Board to sail on??. If so, then where’s any Corporate advantage to filing a bankruptcy petition??  What would push CCL over that edge??

[mz-s]

A lot happens before a stock goes to $0.

 

The stock is delisted from exchanges, buyout/reorganization, etc.

 

Stocks typically don’t just go to $0 overnight.

[chengkp75]

3 minutes ago, LocoLoco1 said:

Always appreciate your intelligent remarks. QUESTION: So.. if CCL can pay it’s bills, then the ‘FatCat’ investors/funds that $own$ most of CCL’s stock will glumly let the market determine it’s dismal value nearly forever and tell the Board to sail on??. If so, then where’s any Corporate advantage to filing a bankruptcy petition??  What would push CCL over that edge??

Yes, if a majority vote cannot force bankruptcy, the only thing that could force on is if the company can no longer meet it's debts, and the creditors file for involuntary bankruptcy.  If there are 12 or more unsecured creditors, and their claims total more than $15,775 (don't ask me why that number), then they can file a petition for bankruptcy.

[ledges1]

Take a look at their balance sheet.

Assets 51.9

Liab.     43.5

Stk Eq.    8.4

It is declining in value fast. Treasury stk held by company declining. Additional retained earnings going forward does not look promising. RCL does not look much better.

[LocoLoco1]

Thank-you. Interesting. I have a TransAtlantic booked for my wife and friend that’s Sailing in 3/wks. I don’t think I will tell her any of this. 

[dmet0225]

First thing I’d do is hop on the internet and ask a bunch of “strangers” what I should do with my money.

[Crusin Hogs]

Carnival has  around 7 BILLION in cash on hand  90 something ships sailing ,  They need to raise the prices of cruise's  , and open up 100%  with no testing ect Like Norwegian   has done to get back in the black , Chasing after the bottom dollar crowd with the cheap cruises will not do it ,, They will spend very little on the ship  

 

[chengkp75]

9 minutes ago, Crusin Hogs said:

Carnival has  around 7 BILLION in cash on hand  90 something ships sailing

And that has dropped from $8.9 billion in 9 months, or about $200k/month.  That's about 3 years of cash, provided fuel costs (and they don't control these with futures contracts) don't drive them to spend much faster.  Revenues have been dropping the last few months, so the cash flow out will increase.  Those 90 ships are valued at $38 billion, with a long term debt against them of $28 billion.  That $7 billion in cash is balanced against current liabilities of $12.9 billion.  So, of that $8.4 billion in shareholder equity that ledges1 posted, all of that is from the equity in the ships.  Don't kid yourself that Carnival is in a good place.

[HaveWeMetYet]

3 hours ago, dmet0225 said:

First thing I’d do is hop on the internet and ask a bunch of “strangers” what I should do with my money.

Best to listen to your financial advisor.

After a stock has dropped about 90 percent then they might tell you it is time to sell.

It will never happen before then.

[grandgeezer]

1 hour ago, HaveWeMetYet said:

Best to listen to your financial advisor.

After a stock has dropped about 90 percent then they might tell you it is time to sell.

It will never happen before then.

It didn’t drop 90% overnight. If you have a competent financial advisor, he should have gotten you out a long time ago.

[icft]

2 hours ago, HaveWeMetYet said:

Best to listen to your financial advisor.

After a stock has dropped about 90 percent then they might tell you it is time to sell.

It will never happen before then.

So true!

[icft]

1 hour ago, grandgeezer said:

It didn’t drop 90% overnight. If you have a competent financial advisor, he should have gotten you out a long time ago.

"Competent" being the key word. How many financial advisers have told their clients to get out of stocks and bonds this year? I don't mean one who says "get out of this stock that has fallen 25% and buy this one that will be going down 20% with the rest of the market in the next six months."

[gkbiiii]

Perhaps soon Carnival will end the "stockholder credits" to save money?

[ray98]

I cannot fathom how people can look at Carnival's financial situation and yet speak with such certainty that they cannot fail.  Do people really allow their judgement to be this clouded just because they like to cruise?  NOTHING is too big to fail.

[ontheweb]

2 hours ago, gkbiiii said:

Perhaps soon Carnival will end the "stockholder credits" to save money?

Why? It is a marketing tool to get people to book. Posters on these boards speculated the same thing as the stock began to plummet after covid. But instead, Carnival not only extended it at their annual meeting, but extended it 2 years instead of the usual 1.

[ray98]

37 minutes ago, ontheweb said:

Why? It is a marketing tool to get people to book. Posters on these boards speculated the same thing as the stock began to plummet after covid. But instead, Carnival not only extended it at their annual meeting, but extended it 2 years instead of the usual 1.

Well....considering they are denying them left and right for casino or 'discounted' rates it seems finances are playing a role.