Carnival Cruise Lines said they're targeting "investment-grade leverage" by 2026. They have already been able to chip away at $4.6 billion in debt from its peak. In other news Carnival Cruise Lines had to ban a female passenger following a reckless stunt. Also, did you know that Carnival Cruise Line's sexual assault charges per capita is actually higher than 27 U.S. States? Keep reading for details on all of this and more!! We also have a detailed breakdown on $CCL, including a trade idea!!
On December 30th a passenger aboard the Carnival Jubilee cruise ship decided to climb over their obstructed view balcony onto the roof of a common area below, while the ship was sailing. A fellow passenger filmed them and posted it as a TikTok video. If the ship made a sudden movement or there was a strong gust of wind, that incident could have ended in a very avoidable accident. “Our security team on Carnival Jubilee identified the guests involved in this matter, and those guests will no longer be sailing on Carnival ships. The safety of everyone on board is our priority and we do not tolerate this behavior." Carnival didn't say whether or not they caught the passenger in the act, or found her after it happened, but according to their statement they clearly banned her for life.
According to their contract with passengers, they had every right to do so as it states, “Any Guest whose conduct affects the comfort, enjoyment, safety, or well-being of other guests or crew will be detained onboard and/or disembarked at their own expense and will be prohibited from sailing with Carnival in the future.” It also mentions a $500 fine. One commenter of the video said, "I mean, climbing over the balcony on a cruise that's out in the middle of the ocean is just a good way to thin out bad genes." While another stated, "Best way to get banned from Carnival".
Carnival Cruise Lines took a huge hit during the pandemic. They had high fixed costs, but weren't allowed to sail. Money was still coming out, but not coming in. Through no fault of their own, their long-term debt soared from around $11 billion to over $25 billion in a matter of months due to COVID restrictions. They were stuck in survival mode during the pandemic.
Now they are allowed to sail again, and their management said they're targeting "investment-grade leverage" by 2026. In the context of Carnival Cruise, "investment-grade leverage" refers to the company's debt level relative to its ability to generate earnings (profits). It's an important metric used by credit rating agencies to assess the financial health of a company and its risk of defaulting on its loans.
Leverage: This term simply refers to the amount of debt a company uses to finance its operations. It's expressed as a ratio, typically debt-to-equity or debt-to-EBITDA (earnings before interest, taxes, depreciation, and amortization).
Investment-grade: This refers to a high credit rating from agencies like Standard & Poor's (S&P) and Moody's. Companies with investment-grade ratings are considered less likely to default on their debt, making their bonds more attractive to investors.
Carnival's goal of achieving "investment-grade leverage" by 2026 means they want to reduce their debt level or increase their earnings (or both) to a point where credit rating agencies would consider them worthy of an investment-grade rating. This would make it easier and cheaper for them to borrow money in the future.
Carnival didn't specify an exact number that they consider "investment-grade" by 2026, however they are already down $4.6 billion in debt from its peak. Management is making progress, but they still have a long way to go to hit their 2026 goal. According to reports Carnival booked 3.5 million new customers in 2023. The Cruise Lines International Association's data says that 85% of people who take a cruise say they want to take another in the future. So out of their 3.5 million new customers, that's around 3 million customers that are going to want to come back, and that's just counting the new customers from 2023. This is good news for Carnival Cruise, but does that make $CCL a buy? Well it is important to keep in mind they will be redirecting a heavy amount of cash flow towards its debt in coming years. We will hear more about $CCL later on in this article from our Exclusive In-House Analysts, as well as a trade idea at the end!
The Cruise Vessel Safety & Security Act (CVSSA) of 2010 requires cruise ships that use ports in the U.S. to report crimes that happened on the ship to the Department of Transportation (DOT). The DOT released their cruise line crime data from 2023 on January, 6 2024.
One of the big findings is that Carnival Cruise Line's per capita sexual assault rate is higher than 27 U.S. States. Carnival Cruise reports 42 sexual assault cases per 100,000 people. New York's is 29.4 per 100,000, Florida is 30, and California is 37.4. The average in the US is 40 per 100,000 people.
According to DOT there were 131 alleged sexual assault crimes in 2023 on all cruise ships that use U.S. ports, up from 89 from 2022. Carnival Cruise Line had the most out of any of the other cruise lines with 45 in 2023. This means that in theory, people have more of a chance of getting sexually assaulted on a Carnival Cruise ship than they do in the majority of U.S. states.
Carnival Cruise Lines alone had 3.5 million brand new passengers in 2023. When people are told they can't have something, that's when they want it. Cruise Lines shut down during the pandemic, and now that they are opening up again there has been an influx of new cruise-goers flooding the market. These new cruise-goers might not know how cruises work, in particular the dining. Here are 7 common mistakes cruise ship passengers make regarding dining, so that you don't end up making these mistakes on your next cruise!
I asked our exclusive in-house analysts from our discord what they thought about $CCL. Here's what they had to say:
General $CCL Breakdown From Ethan:
"Over the last 10 years, CCL is down over 75% from its high in 2018. COVID was the killer of all cruise ship companies, demolishing stock prices since travel was prohibited. However, CCL is trading on a major discount that could offer an incredible buy spot for the coming years. After COVID, we have faced massive inflation which has also kept travel as a whole still muted for the most part. With the summer months roughly 6 months away, CCL could be something to keep an eye on for the short term and the long term if inflation comes down and travel booms back to normal levels, when the cost of things comes back down to normal levels." -Ethan
Technical Analysis $CCL Breakdown From Austin:
"RSI crossed over to sell-side momentum, however it has not yet dipped below 50 on the weekly chart. This indicates that there may still be hope for bulls expecting this stock to level out and remain bullish. StocksBuddy indicator has flashed a "Bear Signal" when the stock broke down below $19/share. Following that signal, Carnival Cruise Lines stock would need to break back above $18 and stabilize to continue any bullish momentum moving forward into our next couple stock trading sessions. Strong trend support lies around $13/share, if bears take control of $CCL stock price - we could see lows in that range." -Austin
Fundamental Analysis $CCL Breakdown From Mr.SLP
"Let's dive into the basics of $CCL's performance and understand what's happening behind the scenes! Carnival Corporation & plc provides leisure travel services globally, including in North America, Australia, Europe, Asia, and beyond. After facing challenges during the COVID-19 pandemic, Carnival has made a strong comeback so far. While revenue growth took time to recover since 2020, it has now exceeded 500%, soaring from $1.9 billion to $12 billion between 2021 and 2022. However, there's a concern in their recovery journey – the substantial increase in debt that incurred during the COVID pandemic. When cruises were halted, debt piled up, and capital raises became necessary for survival. Examining the debt situation, total debt in 2019 was $19 billion, which was manageable due to outweighing assets. Fast forward to today, and it's at $35 billion. The critical question is how they plan to reduce this debt, especially with impending due dates. Time will reveal the outcome. Now, let's consider some valuation measures. The Trailing P/E ratio is 5.99, suggesting the stock might be undervalued, presenting a potential long-term bargain. The Forward P/E is 15.70, indicating an expectation of increasing earnings over time. Overall, the stock could be a strong long-term choice if they effectively manage and reduce their debt. In the short term, a cautious approach may be wise, waiting for selling pressure to subside. Key support levels to monitor are $15, $14, and the strongest at $10. If looking for a possible reversal, consider resistance levels above $17, aiming towards $19." -MrSLP
Options Chain $CCL Breakdown From SwingingBull
"Before considering trading options on Carnival Cruise Line ($CCL), it's crucial to conduct thorough research. The other analysts have done a detailed company and chart breakdown on $CCL, which would be the first steps. Next I like to look at Volatility. The ATR on the monthly is at lows that haven't been seen since 2015. That was right before it made it's run from the $30's to ATH in $70 range." -SwingingBull
Bearish $CCL Thesis From PookiesRevenge
"I don't expect it to hold at these levels, personally, so I'm bearish down to below $15. This one's nice and cyclical."
"This thing needs to get above the $185.55 level for me personally. It's currently trading in the $16's. This is in a monthly downtrend still. If we get above $18.55 I like this for a "Rest and Retire" long term type of play to $32.21, with a stop loss below $14. If it comes down we have $15.03 and $14.17 as my personal levels of interest and relevant high timeframe support. A move below either of these levels followed by a 4H candle close above would be my signal for a long entry, per the trading technique we teach in the discord. The exact stop loss will be for that position, that depends on how low we have gone before closing a 4H back above. If this, in the bigger picture, ever breaks back above $33.46, I think it could go a lot higher at that point. For now it's really important to remain cautious for the bigger overarching monthly downtrend." -BTC_JAY
Option 1: Bullish
Entry: 4H close above $18.55
Targets: $32.21+ (long term hold, or you can take profits on the way for shorter swings)
Stop Loss: Below $14
Option 2: Bullish
Entry: Watching for break below $15.03 followed by a 4H close back above
Targets: $18.55, $32.21 (taking profits on the way)
Stop Loss: Below $14 or the low that was formed after the break below $15.03
Option 3: Bullish
Entry: Watching for break below $14.17 followed by a 4H close back above
Targets: $15.03, $18.55, $32.21 (taking profits on the way)
Stop Loss: Below the low that was formed after the break below $14.17 (depending on how low we have gone before closing back above)
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