Posted on 05/25/2022 12:13:14 PM PDT by Capt. Tom
What happened Shares of cruise line stocks plunged in trading on Tuesday as the market continues to grapple with economic uncertainty. . So what The news continues to be murky at best with companies warning of slowing sales in a variety of sectors, consumers experiencing inflation, and the Federal Reserve continuing to indicate that it will keep raising interest rates.
Today's news was that Snap is experiencing far slower advertising spending in just the last few weeks than expected and that indicates companies from direct response retailers to gaming companies to big brands are pulling back on their spending. This could be an early indication that the economy overall is slowing, which will eventually make its way to people's pocketbooks.
If the economy is slowing as interest rates are rising, it puts businesses and policymakers in a tricky position.
All three of these cruise line companies added a tremendous amount of debt to make it through the financial crisis and that has made their businesses riskier. At the same time, operating cash flow is not back to a sustainable level.
This risk isn't new to the cruise line industry, but if spending is going to decline and consumers are going to pull back on spending, then cruises may be one of the first expenses to go. At a time when investors were hopeful that consumer spending will pick up and the pandemic subsides, the opposite may be true.
Despite the drop in cruise line stocks today, I still see more risk than opportunity. These companies have a tremendous amount of debt and operations aren't anywhere near where they were in 2019. I'm staying out of cruise stocks right now and until they start generating positive cash flow, this is a market that I'll watch from the sidelines.
(Excerpt) Read more at msn.com ...
Are the cruise lines having pro lens with staffing? I know the focus has been on debt service and fuel costs, but when a ship sails with 60% passenger capacity, is there enough staff?
Because the cruise lines spin the reduction in passengers onboard, it is trouble figuring out whether they have reduced the number of passengers to avoid covid outbreaks, or because they can't get the crews necessary to have full ships, or they don't have passengers interested enough to fill the ships to capacity.
The bottom line is if you are not sailing with full ships you aren't making enough money to pay off the Billions of dollars in debt you owe. - Tom
Thank you for the explanation have heard a number of people mention this company and I was unfamiliar with them.
Will try to analyze this all some later.
All I know is the cruise industry has gotten hit extremely hard by COVID and since.
So I would certainly understand there being reasons for concern for the industry.
I realize I am no expert.
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