RCCL stock price verses cut backs

[weregoingcruising]

The stock is going up while while their cutting back quality onboard Celebrity.  Anyone care to comment on this.

[mahdnc]

I have noticed that, too, and feel that it is just a perverse coincidence.

[D C]

Stock prices are irrational and don't necessarily (if ever) assess what is happening on the guest experience side of things. 

 

[weregoingcruising]

4 minutes ago, mahdnc said:

I have noticed that, too, and feel that it is just a perverse coincidence.

It may also throw gasoline on the fire. I'm getting a little scorched by it.

[NutsAboutGolf]

IMO these types of threads are pointless, get heated and locked/deleted...99% of us are not investments experts so you'll receive a lot of pointless comments.  An investment forum which is generally filled with actual investment experts who will quickly steer one to the data they seek

 

Many who own stock mainly do so to get the OBC credit with the investment itself being secondary

 

In short, "cut backs" and also fare increases are simply one minor drop in the bucket of the stock price

Edited February 9, 2023 by NutsAboutGolf

[Swann5]

I don't believe this is a coincidence at all. The market looks for indications that a company is doing a good job to increase revenue and decrease expenses which is exactly what RCI appears to be doing. I've been watching my RCI stock increase significantly over the past few weeks while my holdings in Carnival have only marginally increased. We cruise on Silhouette next week. I'm disappointed to hear about all the recent changes on board but at least RCI stock is heading upwards.

 

[miamibob51]

I am far from a stock expert but there are indications that the increases are due to RCL beginning to restructure their debt. There has been no financial media coverage that I have seen on any real or perceived cutbacks in service or product.

[grandgeezer]

Stock price is determined by what investors think will happen in the future. Cutbacks now will lower their costs which means the chances of higher profits in the future. When the actual numbers are reported at the end of the quarter, if they are much higher, or lower than the experts have estimated, the stock price will react accordingly, then the game starts over for the next quarter.

[newtocruiseinblue]

1 hour ago, weregoingcruising said:

The stock is going up while while their cutting back quality onboard Celebrity.  Anyone care to comment on this.

Happened to see stock commentary on this a few days ago. Demand for cruises are strong and they are a good deal for consumers. Travel demand is still over the top - people want those social media posts.  This has more to do with demand vs cutbacks in the ocean view cafe or room service, but addressing debt is considered. 

[morfred]

1 hour ago, weregoingcruising said:

The stock is going up while while their cutting back quality onboard Celebrity.  Anyone care to comment on this.

Thanks for bringing this up. I had not checked the stock for a while. It might be time to sell.😃

[miched]

1 hour ago, NutsAboutGolf said:

 

 

Many who own stock mainly do so to get the OBC credit with the investment itself being secondary

 

 

Thanks for the post.   It reminded me to apply for the OBC on my upcoming cruises.  $200 of OBC. 
 We bought when it was low for the OBC and it has been worth it 
 

Happy cruising 🌊🚢🇺🇸🌅

[Jim_Iain]

It is a bit naive to impute the stock price to "how well RCL is doing"  

 

The stock price is responding to positive news that they beat the street estimate and are showing strong bookings.    They key is they LOST $1.9 Billion last year.    The initiatives we are now seeing may help them to finally get closer to break even.

 

The street estimated the would loose ($1.96 per share) and they ONLY LOST (1.12 per share) 

 

Load Factors were in line with guidance at 95%, with Caribbean sailings reaching 100%, and holiday sailings close to 110%.

• Total revenues per passenger cruise day were up 3.5% as-reported and 4.5% in Constant Currency, compared to the fourth quarter of 2019.

• Total revenues were $2.6 billion, Net Loss was $(500.2) million or $(1.96) per share, Adjusted Net Loss was $(284.9) million or $(1.12) per share, and Adjusted EBITDA was $409.3 million.
Full Year 2022:

• Load Factors were 85% overall, full fleet back in operation since June of 2022.

• Total revenues were $8.8 billion, Net Loss was $(2.2) billion or $(8.45) per share, Adjusted Net Loss was $(1.9) billion or $(7.50) per share, and Adjusted EBITDA was $711.6 million.

 

Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a widely used measure of core corporate profitability.

Edited February 9, 2023 by Jim_Iain

[Orator]

Jim;

I believe that RCL doesn't break down the  earnings by lines (Royal Caribbean, Celebrity, Silversea, etc.), so it it difficult to know how specific segments are doing. The stock market is about the future and bookings appear to be strengthening and the cruise lines seem to be improving profitability be increasing margins.

 

 

 

 

 

 

 

 

 

[DCPIV]

As @Jim_Iain got into, there is far too much to consider here.  The bottom line is that stock prices are based on looking forward.  Back during the high point of Covid, the stock was greatly depressed because many thought RCL might very well go down the tubes. 

 

A lot of the activity over the last several months very likely is due to the forecast that they will survive, not to mention that they appear to be thriving.  That's what it boils down to.

[Jim_Iain]

48 minutes ago, Orator said:

Jim;

I believe that RCL doesn't break down the  earnings by lines (Royal Caribbean, Celebrity, Silversea, etc.), so it it difficult to know how specific segments are doing. The stock market is about the future and bookings appear to be strengthening and the cruise lines seem to be improving profitability be increasing margins.

 

 

 

 

 

 

You are correct -  RCL does not break down by Subsidiaries.     

 

I guess my main point is that the recent cuts and surcharges have Zero to do with the current financial statement for period ending 12/31/2022.       Any improvement fleet wide will not be reflected until at least the Q1 earnings report for 1/1/2023 - 3/31 March

 

In my past life I use to calculate the margins by division and foretasted earnings on a weekly basis for the BOD.    While they don't report earnings by subsidiary Cruise line I'm certain Celebrity is facing pressure from Corporate to hit  foretasted Sales and Gross Margin to meet Corporate reported forward looking estimates.

 

The main reason for uptick in prices is that they beat the street estimate by a huge margin and the market adjusting to future projections. 

 

All I can say is I have a big smile on my face.    I bought many years ago and have made more money on OBC's that I pain for my stock so to me it's all gravy.

Edited February 9, 2023 by Jim_Iain

[Orator]

2 minutes ago, Jim_Iain said:

 

You are correct -  RCL does not break down by Subsidiaries.     

 

I guess my main point is that the recent cuts and surcharges have Zero to do with the current financial statement for period ending 12/31/2022.       Any improvement fleet wide will not be reflected until at least the Q1 earnings report for 1/1/2023 - 3/31 March

 

In my past life I use to calculate the margins by division and foretasted earnings on a weekly basis for the BOD.    While they don't report earnings by subsidiary Cruise line I'm certain Celebrity is facing pressure from Corporate to hit  foretasted Sales and Gross Margin to meet Corporate reported forward looking estimates.

Agree and thank you for your input.

[Jim_Iain]

2 minutes ago, Orator said:

Agree and thank you for your input.

 

This is what I really find interesting -  After the analysts digested the earnings report -  There has been a shift to Buy and Strong Buy by about 1/2 the analysts.   There seems to be one contrarian.

 

Out of 12 analysts, 5 (41.67%) are recommending RCL as a Strong Buy, 2 (16.67%) are recommending RCL as a Buy, 4 (33.33%) are recommending RCL as a Hold, 0 (0%) are recommending RCL as a Sell, and 1 (8.33%) are recommending RCL as a Strong Sell.

[Orator]

• I can understand the upgrades. They expect future earrings to increase as profit margins and the number of passengers increase. IMHO: The current policy of increasing prices and cutting quality may work in the short run, but I find many former Celebrity loyalists trying other lines as the true luxury lines get more price competitive. It is very difficult to get them back once they've decided to change their behavior.

[Baron Barracuda]

What's troubling to me is that even with 95% load factor last quarter they only achieved $15MM in operating earnings.  Subtracting $400MM in interest expense and a $130MM one time charge related to the Helms-Burton Cuba lawsuit brought the net loss to $500MM.  Long term debt now up to $23B vs $9B pre-covid and stockholders equity down 50% for the year to under $3B.  You can't cost cut your way to prosperity but they need to figure how to get the balance sheet under control.

[Baron Barracuda]

Regarding the rosy booking comments, every quarterly earnings report from every cruise line always seems to rave about strong bookings at higher prices.  That RCL is experiencing record bookings isn't a surprise considering new fleet additions have increased the number of available berths by double digits.  For X, if bookings are so strong why has Blue Chip been offering free cabins on seemingly every Caribbean and West Coast sailing?  Finally, Jason Liberty commented that 80% of upcoming sailings would be to the Caribbean.  Pre-covid that market was getting a bit overcrowded and with many new ships on the way a glut may develop putting downward pressure on prices. 

[mnocket]

As luck would have it, I just finished a post on this very topic in another thread.  I'll repost it below...

 

Judging by the recent stock performance, wall street seems to like the steps the cruise lines are taking to regain their financial footing.  I do not, but I'm starting to think may be because of my parochial viewpoint.

 

I've become so concerned by what I see as a "death spiral" of cruise lines raising prices while degrading service that I've begun unloading my cruise line stocks despite the rising stock prices.  I acknowledge that this may be a mistake brought on by my personal focus on Premium cruise lines. I'm starting to think that the future of cruising will be safe with the mass market lines and, to a lesser extent, with the luxury lines.  It's really only the Premium lines whose future is seriously in doubt.  That said, I'm still getting out of cruise line stocks.  I just think there are better industries to invest in whose futures are easier to forecast.

[TommyD3]

20 minutes ago, Baron Barracuda said:

What's troubling to me is that even with 95% load factor last quarter they only achieved $15MM in operating earnings.  Subtracting $400MM in interest expense and a $130MM one time charge related to the Helms-Burton Cuba lawsuit brought the net loss to $500MM.  Long term debt now up to $23B vs $9B pre-covid and stockholders equity down 50% for the year to under $3B.  You can't cost cut your way to prosperity but they need to figure how to get the balance sheet under control.

With $23 billion in debt and $400 million interest charges per quarter don't personally see how they can ever become profitable. I suspect all the recent changes at Celebrity were ordered by the new Royal CEO (the former CFO) as an attempt to increase profit. With rising interest rates don't know how they can survive with $23 billion in debt !!!

[mnocket]

1 hour ago, Jim_Iain said:

 

This is what I really find interesting -  After the analysts digested the earnings report -  There has been a shift to Buy and Strong Buy by about 1/2 the analysts.   There seems to be one contrarian.

 

Out of 12 analysts, 5 (41.67%) are recommending RCL as a Strong Buy, 2 (16.67%) are recommending RCL as a Buy, 4 (33.33%) are recommending RCL as a Hold, 0 (0%) are recommending RCL as a Sell, and 1 (8.33%) are recommending RCL as a Strong Sell.

It is interesting.  However when I find my personal opinion so at odds with the analysts opinions I know it's time to look elsewhere for investment opportunities - even when the stock movement seems to validate the analysts. 

[kguerriero]

Was reading the transcript the other day and some interesting subtext:

 

-Q3 call was all about customer satisfaction as a supporting factor of business, demonstrated excellency in execution, and high NPS scores. NPS not mentioned once during this last one, so I'm sure some interesting (negative) developments on the passenger experience side.

 

-With the spotlight on yield and capacity, I'm wondering if/how the Blue Chip cruises are playing into this. Some users are reporting elevated levels of offers, and a new $7-$10 daily fee. Is this to categorize them as rev passenger and goose the numbers?

 

-"Closing the gap" to more expensive land-based vacations was brought up, and Liberty seemed a little more bearish than last time. They don't intend to close the gap in pricing and value this year, so I'm wondering if getting their heads bitten off with current cutbacks spooked them a little, or they're just intending to play more of a long game.

I'm with some of the other folks in this thread that it's going to take some careful work and serious brand positioning skills to keep everyone intact on the other side. RCL is progressively moving upscale, which might end up leaving the entry level of the market open for Carnival, and cannibalize some of X if they get too glitzy, while Celebrity cheapens the core product.

 

Retention is super important for the industry, getting people in the door is just half the battle, they actually have to come back too through indoctrination. Worried if X is more of a wet blanket than the other lines with their cuts, passengers who jump ship (figuratively of course) may never come back, and will migrate to offerings from Princess/Virgin/RC after getting burned, provided they keep cruising at all.

[grandgeezer]

1 hour ago, mnocket said:

It is interesting.  However when I find my personal opinion so at odds with the analysts opinions I know it's time to look elsewhere for investment opportunities - even when the stock movement seems to validate the analysts. 

I’ve been dabbling in the market for over thirty five years and have done better than I ever imagined. I pay little attention to the analysts, do my due diligence and react according. The first two questions I ask my self is do I believe in the product and the management team that runs it. In the case of the cruise industry the answer to both is no. Even when RCL was around $20, I never even considered buying. 

Just been sitting back and watching during the pandemic and after. The extra  money I have coming in has been going in cds, about $5500 a month, and with the interest rates over 4%, it’s starting to really add up. The stock market is a major contributor to this. i have to take a minimum withdrawal from my 401k each year. For 2022, the take home from that, after federal taxes taken, is more than the gross of my social security, my wife’s social security, my pension, and interest from my cash savings. I don’t think the shareholder obc from RCL would be anywhere near that.