Should I Buy, Sell, or Hold Cruise Line Stocks?
The three major cruise lines — Carnival (NYSE:CCL), Royal Caribbean (NYSE:RCL), and Norwegian (NYSE:NCLH) — have been shut down completely by an order from the Centers for Disease Control that bans all cruises from U.S. ports for 100 days (though it could be less than that if the public health crisis abates).
That has forced all three companies to dock their ships, lay off workers, and do everything possible to conserve cash. They have also tapped credit lines, and either raised new capital already (in the case of Carnival) or seem very likely to need to do so (Norwegian and Royal Caribbean).
How deep is the sea of red ink?
It has been widely reported that Carnival, the biggest of the three cruise lines, will spend about $1 billion a month for ongoing operations and to keep its ships ready to go when it gets permission to sail again. The other two cruise lines have not given estimates, but it’s very clear that significant money is going out to maintain ships, provide customer service, and issue refunds, while very little is coming in in the form of new reservations.
This has, of course, devastated the stocks of all three companies. Here’s where each one stood at the market close April 14 compared to its 52-week high:
- Carnival: $12.51 ($56.04)
- Royal Caribbean: $37.84 ($135.32)
- Norwegian: $12.35 ($59.78)
Those are, of course, bleak numbers — and you have to at least consider that… Continue reading at The Motley Fool