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Royal Caribbean Group (RCL)
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Cruise Lines Under Pressure to Significantly Raise Ticket Prices
March 06, 2021
Cruise ships docked in Nassau
Cruise companies may be eyeing a significant increase to ticket prices in the near future as demand surges and sailings sell out in record time.
“Wall Street is not happy,” said one source familiar with the situation. “If cruises are flying off the shelves, the message from big investors has been to raise prices if inventory is selling too quickly … the companies are leaving too much money on the table.”
Cruise lines have widely reported strong pent-up demand and record sales volumes in media announcements, leading to a backlash from the investment community.
Carnival said sales were solid due to pent up demand in late February, and a few weeks earlier, Oceania saw its world cruise sell out in a single day.
Victory Cruise Lines and American Queen Steamboat said that January and February 2021 bookings are over 35 percent higher than November and December 2020 bookings, according to a press release.
The story is also good at Royal Caribbean Group, with bookings up 30 percent. $RCL $NCLH
Market too far ahead on $RCL, not same company it was a year ago. Massive $20B high-interest debt, increased shareholder dilution, impending cruise delays. CDC still imposing strict restrictions on the on ALL cruises. And +250M/month cash burn. RCL fairly valued ~55/share or less...
Today's move is due to a bogus upgrade by Paul Golding, the paid shill at Macquarie. They are attempting to pump RCL today...the day before the $RCL 91/share dilution closes...talk about collusion and manipulation. SEC really needs to be diligent in ferreting out these things.
I know that all the cruise lines have been trying to raise cash (CCL, RCL, NCLH). But I have to say that I feel cheated when my shares get diluted. I know this is a standard way for companies to generate cash, but it really is a disservice to existing shareholders.
With today's offering RCL has now done the following since the virus hit:
1. $600 million in credit facility drawdown
2. $3.32 billion in secured notes, 1 billion due in 2023 and 2.32 billion due in 2025
3. An additional 1 billion in secured notes due 2023.
4. $1.65 billion in convertible notes due/convertible in 2023.
5. 9.6 million new shares of common stock representing about a 4.5% dilution.
6. Today's announcement of $1.5 billion in common stock which at Friday's closing price represents about 16 million shares (about a 7% dilution).
It's hard to pinpoint the cumulative effect of these measures on the company once it "returns to normal." We don't know the interest rates of some of the debt and we don't know things like whether it cold be refinanced or extended we also don't know which creditors are going to convert shares and which aren't.
RCL had about $1.8 billion in profits in 2019. I estimate that just the new debt alone (about $5 billion) is going to cost them $300-400 million a year to service. That's about a 15% impact. Then you add in the new dilution from the new shares--about an 11-12% impact. Bottom line: the stock price, even if it returns to "normal" (high was 133 in 2019) is going to take about a 25% hit. That means a fair target price (133 x .75) is about $99 a share. Look where we are at now. I'm just not seeing this as a compelling investment...and I own the stock. :(
Offering price is set to 91, but what will happen if stock price ends below 91? Will they continuously reduce the offering price, or will they end up with unsold shares and trigger next round of offering with lower price target?
Next week RCL will announce they will be making a 100 million stock offering at a price of $100. Who ever is underwriting this is pumping the stock to the moon.
Its not a great feeling when a stock gets pumped after you buy put options on it
humm to open a short position or buy long range put options..
Question on short sellers. Just interested - for what price would you actually buy and go long on RCL?
I'm disappointed for the members here. We suppose to exchange information, doing research and working together to beat the market, so that everybody will benefit. Unfortunately, people are blaming and working against each other. So sad ......
So I watched a video this morning, where Mexico (Cozumel) is working on a terminal for ships to embark in Mexico for cruising. The video said rumor has it Royal is in talks with Mexico. This would be huge. Lets get the cruises begin. Video was from La Lido Loca. 😎
Uncanny how it dropped once the new shares were delivered yesterday at $91 and there was no longer the need to artificially prop up the price.
CCL is up 6% - what's going on????
I agree with the price of the stock around $40 fair value. $90 ....reallly? Who's doing a buy more job here. Maybe they should switch to investing in the pot stocks because that what they are smoking.
Welcome to the 5 stages of grief. Last Friday was denial for tech and growth stocks.
$msft $amzn $fb $twtr $goog $nflx $zm $pltr $ba $ual $dis $ccl $nclh $aal $dal $rcl $mgm $wynn $lvs
Buying hand over fist on Monday. Look at CCL.....up 49% the last 6 months. Cruising season is right around the corner.
YESssss..... don't short a stock when 200M shares of the 250M outstanding are owned by institutions.
To short sellers and those wondering why this is up 11%+ -
This thing makes no sense to go up 11%+ and be at 11 month highs when reporting a loss of $1.1Billion...they aren't even going to be cruising until end of year.
Nonetheless, if you are one of those playing the short game on this stock...don't try to make sense of the price increases.
Just stop fighting it and get out of that position...maybe not today on a big up day but find a good exit price. Market Makers/institutions are manipulating this stock big time is the only thing that makes sense.
I use to have a short position in RCL until I got burned 5-6 months ago and was forced to close out my position and take the loss to stop it from growing.
Honestly with how the market is lately...it's best to avoid shorting and find good stocks to hold, both short term and long term. Just my thoughts from being in your shoes before.
I actually almost bought a position recently at $65 to go long on this stock since it goes up on bad news, only highlighting the future potential that is still more than 6-12 months away!
I admit I was wrong on this one and exited too soon. I still do not understand the valuation given debt and dilution. I know there r people who think, this was 133 at some point and will be back to 133,....ironically I think it will pass its all time high just to not make any sense
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