Insights

Why Royal Caribbean Got Thrashed on Thursday

What happened
Thursday wasn’t a smooth sail at all for Royal Carribean Cruises (NYSE: RCL). The veteran cruise ship operator’s recent struggles were front and center in its latest earnings release, delivered that morning. Many investors headed for the lifeboats, leaving the stock with a more than 5% decline on the day.
So what
The good news for Royal Caribbean is that the broader travel and tourism sector is recovering in a meaningful way from the pandemic, and the great bulk of its fleet capacity (nearly 90%) is currently sailing. That’s why first-quarter revenue saw a massive rise, to nearly $1.06 billion from last year’s comparatively minuscule $42 million.
Image source: Getty Images.

Unsurprisingly, the company is still nowhere near above the waterline in terms of profitability. That said, its non-GAAP net loss didn’t deepen too significantly; it was $1.16 billion ($4.57 per share), against the first-quarter 2021 shortfall of $1.08 billion.
On average, though, analysts were expecting better. Collectively, they were estimating Royal Caribbean would earn $1.15 billion on the top line, and post an adjusted net loss of $4.47.
Now what
Perhaps wary of publishing more deep-in-the-red numbers, Royal Caribbean did not proffer any guidance. This is never an investor-pleasing move, as shareholders like to have at least some indication of how their company might do in the future. 
Not all is doom and gloom with Royal Caribbean, though. The company quoted CEO Jason Liberty as pointing out that, starting in March, its booking volumes have topped the all-time-high levels reached in 2019 (the year before the pandemic really kicked in). Liberty added that “we are optimistic that 2022 will be a strong transitional year as we return to full operations and profitability in the second half of the year.”
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. –

What happened

Thursday wasn’t a smooth sail at all for Royal Carribean Cruises (NYSE: RCL). The veteran cruise ship operator’s recent struggles were front and center in its latest earnings release, delivered that morning. Many investors headed for the lifeboats, leaving the stock with a more than 5% decline on the day.

So what

The good news for Royal Caribbean is that the broader travel and tourism sector is recovering in a meaningful way from the pandemic, and the great bulk of its fleet capacity (nearly 90%) is currently sailing. That’s why first-quarter revenue saw a massive rise, to nearly $1.06 billion from last year’s comparatively minuscule $42 million.

Image source: Getty Images.

Unsurprisingly, the company is still nowhere near above the waterline in terms of profitability. That said, its non-GAAP net loss didn’t deepen too significantly; it was $1.16 billion ($4.57 per share), against the first-quarter 2021 shortfall of $1.08 billion.

On average, though, analysts were expecting better. Collectively, they were estimating Royal Caribbean would earn $1.15 billion on the top line, and post an adjusted net loss of $4.47.

Now what

Perhaps wary of publishing more deep-in-the-red numbers, Royal Caribbean did not proffer any guidance. This is never an investor-pleasing move, as shareholders like to have at least some indication of how their company might do in the future. 

Not all is doom and gloom with Royal Caribbean, though. The company quoted CEO Jason Liberty as pointing out that, starting in March, its booking volumes have topped the all-time-high levels reached in 2019 (the year before the pandemic really kicked in). Liberty added that “we are optimistic that 2022 will be a strong transitional year as we return to full operations and profitability in the second half of the year.”

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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