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RCL - Cruise Stocks - Qualitative, Unscientific
Old 08-03-2021, 04:55 PM   #1
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RCL - Cruise Stocks - Qualitative, Unscientific

Pre-Pandemic, I really enjoyed cruising. Sure, it's got its 'cattle' moments - but overall, I could have a vacation revolving 2 things I treasure: Looking at ocean, and eating mass amounts of food.

RCL - it's certainly up from it's Covid-Low, but not near it's pre-Covid high and lately it hasn't been so hot.

I constantly look at cruise sites, pricing hypothetic trips and lately I've noticed, many cruises are booked! Especially the top-tier suites and categories. Not just the 4 day or 7 day Carib stuff -- but Alaska, Europe, Transatlantic, Transpacific.

Prices are as high as they've ever been.

If Covid ever gets resolved.... any reasons why RCL doesn't go back to pre-Covid levels? Heck after the stock market run up, I'd think people of age have fatter 401K's, stock accounts, savings - and might even up the spending on things like this.
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Old 08-03-2021, 05:02 PM   #2
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I think cruise stocks will take a while to recover. They went deeper into debt and floated more equity just to stay "afloat" during the pandemic, almost 16 months with no revenue. Time to buy, which I did, was when they hit bottom last year.
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Old 08-03-2021, 05:28 PM   #3
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My unscientific perspective is that cruisers love cruising. I'll point to the overwhelming response to the cruise lines looking for volunteers for back to sailing trial cruises.

IMO, they'll eventually get back to pre-covid profitability but it's a question of how long that will take versus potentially better investment returns elsewhere in the mean time.

IIRC, the RCL CFO mentioned during a quarterly call that the newer larger ships are profitable at ~30% capacity. I suspect many sailings are showing fully booked as the lines limit the capacity to allow for social distancing on the ship while still being able to be profitable. I don't think cruise pricing is currently needed to draw more customers. With less supply and there seems to be enough demand that there isn't a need for a lot of sale pricing, at least on the popular itineraries and ships.
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Old 08-03-2021, 07:38 PM   #4
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I think it should take a few years after they are sailing at capacity for the stock price to get back to the $130 or $140 level again. But I was surprised at how quickly it recovered to the $80 range a few months back, so maybe it’ll recover faster than I think.

I was astounded in March 2020 when the price hit mid 20s after having been around $135 before COVID. To me, Wall Street was predicting bankruptcy at that price. We bought around $30 and sold at $80.

But with the additional stock and debt issued since COVID, I think fair value is more like $100 instead of $135. Just my opinion.
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Old 08-03-2021, 07:41 PM   #5
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Quote:
Originally Posted by YVRRocketSurgery View Post
My unscientific perspective is that cruisers love cruising.
My equally unscientific opinion concurs.

Lots of people say they'll never cruise since COVID.

I suspect most of them said the same thing before COVID.

Those who like cruising, I believe, will be back. Some might be more cautious than others, but I think the overall up-tick in travel might counter a lot of that.

As to how to make a stock play on that observation, I don't know. Personally I thought Norwegian was always well-run and weathered the pandemic about as well as any. But I haven't looked at the fundamentals of any cruise lines in any detail. Maybe someone has some numbers to share.
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30% - great point
Old 08-03-2021, 08:56 PM   #6
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30% - great point

Quote:
Originally Posted by YVRRocketSurgery View Post
My unscientific perspective is that cruisers love cruising. I'll point to the overwhelming response to the cruise lines looking for volunteers for back to sailing trial cruises.

IMO, they'll eventually get back to pre-covid profitability but it's a question of how long that will take versus potentially better investment returns elsewhere in the mean time.

IIRC, the RCL CFO mentioned during a quarterly call that the newer larger ships are profitable at ~30% capacity. I suspect many sailings are showing fully booked as the lines limit the capacity to allow for social distancing on the ship while still being able to be profitable. I don't think cruise pricing is currently needed to draw more customers. With less supply and there seems to be enough demand that there isn't a need for a lot of sale pricing, at least on the popular itineraries and ships.

Now that - is an excellent point, but - have the CruiseLines given notice that they are limiting passenger count on the ships? I ask because ion sites where avid Cruisers write reviews on the most minimal detail - hasn't been a mention of limited capacity. Also, IMO it's a HUGE selling point for safety -and - more space on the ship yet I don't see it touted on their websites. So I'm not saying they aren't capping it at 30% occupancy, just saying - I haven't seen anything about it.
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Old 08-03-2021, 08:58 PM   #7
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Well I hope they have got the debt figured out. I think it would be a bit cheesy of a look for the government to one day bailout cruises - -- in that yes, the higher paid officers(some), and the investors, and executives are Americans...but the VAST majority of "jobs saved" can't be claimed when most of the crew is from all sorts of other countries.
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Old 08-03-2021, 09:12 PM   #8
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Now that - is an excellent point, but - have the CruiseLines given notice that they are limiting passenger count on the ships? I ask because ion sites where avid Cruisers write reviews on the most minimal detail - hasn't been a mention of limited capacity. Also, IMO it's a HUGE selling point for safety -and - more space on the ship yet I don't see it touted on their websites. So I'm not saying they aren't capping it at 30% occupancy, just saying - I haven't seen anything about it.
Recent Carnival sailings have been at 70% capacity.
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Old 08-03-2021, 09:22 PM   #9
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Well I hope they have got the debt figured out. I think it would be a bit cheesy of a look for the government to one day bailout cruises - -- in that yes, the higher paid officers(some), and the investors, and executives are Americans...but the VAST majority of "jobs saved" can't be claimed when most of the crew is from all sorts of other countries.
You forget how many jobs there are in the US for servicing the ships, goods, ports, agents, etc. And don't forget how many fly to ports, stay in hotels day before or after, etc. Plus all the goods to support the industry.

According to this, it's 178,000 US jobs as of 2019.

https://www.statista.com/statistics/...ry-since-2007/

According to this it's 254,000 US jobs and $32 billion in economic activity.

https://www.usatoday.com/story/trave...ic/3776982001/

This estimates 436,000 US jobs and $55 billion economic impact.

https://cruising.org/en/news-and-res...illion-in-2019

We can quibble about what is the "right" number but cruising is still fairly sizable contribution to US economy.

I agree though, hopefully they have debt figured out. But let's also be aware that cruise industry is the only industry that the US government required remain shut down for all those months. By comparison travel on planes was allowed, as was trains. Hotels remained open. So a lot of what cruise industry went through it was not self imposed by the cruise lines. Yes ... Avid cruiser here. [emoji39][emoji3554]
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Old 08-03-2021, 09:29 PM   #10
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I don’t bother with the stock, but I’m very curious to see what happens with the industry.

Those of you who say there are just so very many die hard cruisers out there are probably right. It’s also a convenient way for family including extended family to spend time together. Our neighbors often met family for a cruise.
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Old 08-03-2021, 11:57 PM   #11
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Quote:
Originally Posted by MichealKnight View Post
Now that - is an excellent point, but - have the CruiseLines given notice that they are limiting passenger count on the ships? I ask because ion sites where avid Cruisers write reviews on the most minimal detail - hasn't been a mention of limited capacity. Also, IMO it's a HUGE selling point for safety -and - more space on the ship yet I don't see it touted on their websites. So I'm not saying they aren't capping it at 30% occupancy, just saying - I haven't seen anything about it.
I haven't been reading the cruisecritic boards of late but have started watching a Youtube creator EmmaCruises. She has started cruising again and IIRC, she referrenced limiting/lower capacity in a few of her videos. However, I don't think it's down to 30% but, based on the videos and some articles I've read, more towards the 70% range bobandsherry mentioned.
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Old 08-18-2021, 11:36 AM   #12
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Just a follow up on the capacity limits.
Facebook post by Michael Bayley, RCL's CEO, on Aug 16:
"13 of our 26 ship fleet back sailing the seas ! All of our ships starting operating with reduced capacity either by government mandate, for example Singapore and Southampton or through voluntary caps we placed on ourselves that ranged from 30 to 50 per cent. As we move month by month we are increasing our capacity ship by ship !"
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Old 08-18-2021, 11:49 AM   #13
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The Alaska carnival cruise we took was the 2nd trip for that ship since it stopped 14 months ago.
It was at 93% capacity on a 7 day trip.

For us, I know it was because they sold us an extra large balcony at Total price including all except the tip: $1,605 for the both of us.
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Old 08-18-2021, 03:04 PM   #14
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The stocks: Cruise stocks issued shares and took on debt in the pandemic. So you have to evaluate the impacts of dilution and higher costs on each issue.

That is a very good reason they will not just return to 2019 stock prices if business returns . They may get there but it will take time I suspect.
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Old 08-18-2021, 05:05 PM   #15
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Agree with others it'll take time. The time to buy was in the COVID dip. I did, both CUK and NCLH. I've added some during other smaller dips, and still overall performance from my cruise stocks has outpaced the S&P. It's only about 3-4% of my total portfolio, but I bought these as long term gainers, so expecting to hold for 3-5 years to get back to "normal" levels. If they do, could be a 5- to 7-bagger which will be nice... just gotta be patient. RN prices move as COVID moves.
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