Stock Price of Norwegian Cruise Line Tank Over 10% amid Wider Losses and Soft Guidance

UTC by Bhushan Akolkar · 3 min read
Stock Price of Norwegian Cruise Line Tank Over 10% amid Wider Losses and Soft Guidance
Photo: Norwegian Cruise Line / Facebook

The company’s future guidance for 2023 doesn’t look promising as it tries to crawl back from difficulties while moving toward profitability.

On Tuesday, February 28, the stock price of Norwegian Cruise Line (NYSE: NCLH) tanked by more than 10% slipping under $15. This came as the company posted wider-than-expected losses and posted softer guidance for the year ahead. Interestingly, the losses mounted despite the persistent travel demand in the market.

Norwegian Cruise Line Stock

During the fourth quarter of 2022, the Norwegian Cruise Line reported losses of $1.04 per share which was more than the analysts’ estimates of 85 cents. The company is now projecting a full year’s earnings per share of 70 cents, down from the expectations of $1.04.

While the travel demand remains strong, the company has struggled to reduce costs as well as debt that’s weighing down the business. As of December 31, the Norwegian Cruise Line had a debt of $13.6 billion. Although they seek to climb back to profitability, they haven’t offered much guidance in that regard for 2023.

The stock of Norwegian Cruise Line (NYSE: NCLH) ended trading at the $14.82 level on Tuesday. Amid the broader recovery in the US market this year, the NCLH stock is up by 25% since the beginning of 2023. However, the recent guidance from the company can put the stock once again under selling pressure.

Norwegian Cruise Plans to Consolidate Business

Norwegian Cruise CEO Frank Del Rio explained that the company’s first quarter of this year will be the “highest cost quarter”. However, he expects the situation to improve by the second quarter and further into the second half of 2023.

For the first quarter, the company is projecting losses of 45 cents per share. This will be 10 cents more than the Wall Street expectations. Even as the company is returning more ships to service, its costs continue to rise exacerbated by inflation. Speaking on whether they would consider an equity raise to manage debt, CEO Frank Del Rio said: it wouldn’t be “prudent to issue more equity to de-lever the company,” even though “there’s a lot of work to do.”

He further added that their only hope currently to ride out of difficulties is the strong demand. Rio added:

“We’ve seen very, very strong record – near record booking levels dating back to November,. So we simply don’t see a weakening consumer.”

However, Norwegian Cruise has been behind its competitors. But the overall industry continues to battle rising interest rates and higher fuel prices. Competitor Royal Caribbean has managed to control losses while having strong bookings.

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