Posted on 06/30/2022 4:06:14 PM PDT by Capt. Tom
The market's view of these travel and leisure companies is growing more pessimistic. What happened The terrible week for cruise line stocks continued on Thursday. Not only is the broader market's decline dragging down their share prices, but there are also fears that the companies are seeing pricing pressure for tickets.
So what On Wednesday, Morgan Stanley analyst Jamie Rollo said in a report that he was worried that cruise line companies could ultimately face insolvency if their business conditions don't improve soon. And on Thursday, Citi leisure and travel sector analyst James Hardiman said during an interview on Yahoo! Finance Live that cruise companies are facing "some pushback on pricing," especially as ships get closer to operating at full capacity.
At the same time, operators are facing higher expenses due to rising labor costs, high fuel prices, and rising interest rates. So it's understandable that the market is skeptical about their futures.
When the broader market falls, as it did in early trading Thursday, high volatility stocks tend to take more exaggerated tumbles. That's another piece of what we're seeing here.
Now what There's a lot of noise in the market Thursday and it's hard to decipher what's real and what's not. But I think it's clear that all the players in the cruise industry will face some serious challenges over the next year.
It's possible that the U.S. economy is already in a recession, and with inflation at a 40-year high, pressures could persist for cruise lines on both the revenue and expense fronts. That's not good, because these companies are already burning cash and have high debt loads.
The market seems to be realizing that the future looks pretty bleak for cruise lines, and that it would take a massive economic recovery to change that outlook. I don't anticipate the macroeconomic picture will get significantly better in the next few quarters, so it may be years before we see these companies generating positive cash flow.
By the time they recover, it's entirely possible that they'll have to restructure their debts. And downward spirals can happen when borrowing costs rise as stock prices fall, leaving companies paying higher costs to raise the funds they require to run their businesses. If a company can't get to positive cash flow and pay down debt, it can wind up in real trouble. I think we're there with cruise lines, and the market may be realizing the same thing.
Also, if any worker on cruise ship is found to break rules or steal from passengers, they get banned for life by all cruise companies. May be why I never had a problem losing jewelry left in open sight in the cabin, during my 46 cruises.
Now who doesn’t want to get in the middle of a Carnival Cruise chimp out?
I saw on local Florida TV yesterday that the newest Disney ship was due to sail from Port Canaveral and that it was booked solid. It seems there is demand so why isn’t there cruise line performance meeting that demand making record profits?
Lewis Hamilton fans...
:)
Before Covid, the economy was good, gas cheap, and cruises affordable for most that wanted. The War on The People via Covid wrecked the economy, putting cruise lines on the ledge. And Go Brandon’s War on Gas & Oil has is pushing them off the ledge because people can’t afford the luxury of a cruise even with the Covid over.
We went to Frisches last night and their salad bars are closed…permanently. He didnt specify but I got the feeling he was meaning all their restaurants.
It’s getting bad and I have a sinking feeling it will be worse than I’ve ever seen before. Oil embargo, real estate bubble, Carter inflation years., COVID etc.
works for me...
thank God we never saw these problems when we were cruising back in to 90s
right???
I wanted to take my grandsons on a cruise. None of us are vaccinated. So it eliminates 30 percent or so of potential customers.
^5 to their parents, and to you for raising one of them. Anyone who Covid vaccinates kids is a fool in my estimation.
Not to mention all of the potential passengers who ARE vaccinated, and keep getting COVID as a result. I know a number of coworkers and friends who can’t seem to stop coming down with COVID, and they’ve all been “vaccinated.” Myself and others I know who wisely avoided the jab nonsense? We’ve all been fine. Amazing what a fully-functioning immune system can do, especially when it’s allowed to encounter possible pathogens for future reference.
My wife and I used to do one or two cruises per year and occasionally three. But right now there is no way I am going to get on a cruise and get tested and tested and tested and tested and have to wear a mask all the time, have to deal with all sorts of idiot protocols, and be paying for amenities that I can’t use.
No thank you.
Problem is NOT lack of cruisers. Problem is lack of workers!
My frequent grocery store, Aldi, has a sign out for help wanted at $16/hour for many weeks. And all I see is new faces working there every week. I am guessing that there are 11 million job openings and only 5.5 million unemployed is the main reason. It is a job seeker’s market.
Add to that the very generous unemployment benefits, so fewer want to drag their butt to work!
On my last cruise in April this year, NO MASKS mandatory. I had 2 jabs in Feb & March 2021. Those allowed me to enjoy 5 cruises at half normal price, and the ships were half empty meaning no crowds and better service. And by the way me and my wife have zero adverse effects from the jabs and never caught covid.
Well I am happy for you. As for me and mine there is no way in hell I am going to take the covid shot.
And in May both my wife and I caught covid. It was basically a bad cold. But two of our fully vaccinated woke individuals at my office died from it.
entropy,
Would you buy a cruise line stock?
I’m unfamiliar with the industry and don’t like investing in what I don’t know.
However, looking at the Big Three.
None of them are expensive stocks.... might have to take flyer one. Even if they slide farther....just hold till they inflate a little, then sell.
“The covid testing and proof of vac will be gone by September.”
As long as they punish us unvaxxed with insurance mandates, I’m not going.
I’ve managed to keep all my 4 kids and 6 grandkids pure blood. Except my oldest granddaughter RN. And unfortunately I am afraid to ask if she is going to vaccinate my only great grandson who is 1 and a half.
You won the Russian Roulette game.
Theyre in debt because they insist on 2X jabs and boosters to cruise ...
and then the vax are getting the Wu Hu Flu while onboard ...
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