Will Cruise Line Stocks Run Out of Money?
For an industry that aims to spend its time staying above water, it's only fitting that liquidity has become a top concern. Royal Caribbean (NYSE: RCL), Carnival (NYSE: CCL) (NYSE: CUK), and Norwegian Cruise Line Holdings (NYSE: NCLH) are currently closed, and that will continue to be the case until at least deep into the summer season. Each company has raised billions apiece in recent months, but some Wall Street pros wonder if the major players have enough money to stay afloat.
Ahead of Wednesday morning's earnings report from Royal Caribbean, Wells Fargo analyst Timothy Conder put out an updated note in which liquidity was front and center. Even after completing a senior secured notes offering, Conder figures that the country's second-largest cruise line would have to raise another $2.5 billion to $3 billion to weather the worst-case no-sail scenario, which pushes the disruption well into next year. Royal Caribbean went on to report expectedly crummy financial results, but with roughly $3.3 billion in current liquidity and a monthly cash burn rate of $250 million to $275 million during a prolonged suspension of operations, does it really have to raise money right now? With its stock price trading 70% below its January highs, this may not be the best time to secure financing through what may include issuing new stock or convertible debt.
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Source Fool.com
