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What happened
Stocks in the cruise industry had another difficult day. In Wednesday’s exchanges, the actions of Norwegian Cruise Line Holdings (NASDAQ: NCLH) closed 3% lower, Carnival corporation (NYSE: CCL) fell 3.1% and Royal Caribbean (NYSE: RCL) – the only cruise line that performed the best yesterday – did the worst of all today, losing 3.9%.
Indeed, over the course of the day, Royal Caribbean has been the consistent underperformance, even dropping more than 5% at one point.
Image source: Getty Images.
So what
So what’s suffering in the cruise industry this time around? To put it simply: cash flow.
Based on the latest financial results released this morning from the top three listed cruise lines, industry news site CruiseIndustryNews.com (CIN) has broken down the current rates of “cash consumption” – cash flow free negative – for each action. Here’s how much they burn at last count:
- Carnival Corporation, the largest cruise line, burns the most – $ 530 million per month.
- Royal Caribbean is in second place in both fleet size and cash consumption – around $ 270 million per month.
- And at the back, Norwegian Cruise Line is burning $ 175 million a month.
Now what
CIN points out that Carnival’s situation is not as bad as it looks. Carnival may burn the most money, but that’s mainly because it operates the most ships. In fact, the smaller Norwegian Cruise Line, the website observes, spends the most money by boat while these ships are moored in port.
Yet, while there are minor variations between companies, the overriding fact is this: Across the industry, these three companies alone are currently spending nearly $ 1 billion a month in cash, with no income whatsoever. to offset their costs. And they’re going to have to keep burning that money for months, until they finally get permission from the Centers for Disease Control and Prevention to resume transporting passengers at sea.
That is, in a nutshell, why investors are unhappy with cruise stocks today.
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