Despite Choppy Waters, Royal Caribbean Cruises Is Ready to Set Sail

RCL stock - Despite Choppy Waters, Royal Caribbean Cruises Is Ready to Set Sail

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  • Royal Caribbean Cruises stock still hasn’t revisited pre-Covid-19-pandemic levels.
  • At the same time, the company is marking milestones in returning to full operations.
  • Investors should consider an investment but be patient as progress won’t happen overnight.

Headquartered in Miami, Florida., Royal Caribbean Cruises (NYSE:RCL) is known worldwide for providing pleasure trips across the oceans and seas. Yet, holding RCL stock hasn’t always been a pleasure trip, to put it politely.

As soon as there’s progress, something comes along that deals a blow to the cruise-line business. Among the most prominent examples are the delta and, more recently, the omicron variant Covid-19 strains.

Yet, Royal Caribbean is still up and running, and there could be a great investment opportunity here. Patience will be essential, as RCL stock isn’t necessarily going to revisit 2019 levels when you want it to.

Meanwhile, Royal Caribbean is demonstrating progress in spite of persistent challenges. Check the data, and you may be convinced to buy and hold some shares for the long term.

RCL Royal Caribbean Cruises $75.63

What’s Happening with RCL Stock?

When RCL stock hit $135 in January of 2020, few among us could have imagined the collapse that would soon take place. Indeed, the share-price drop to $24 was swift and shocking.

There’s been a partial recovery, but it has tested the shareholders’ patience. At least, we can say that the Royal Caribbean share price has recovered $75 and the company’s market capitalization is back up to $19 billion.

Among the biggest obstacles have been the regulations imposed by the Centers for Disease Control (CDC). These regulations are probably necessary to protect the public’s health. However, they’ve undoubtedly also crimped U.S.-based cruise lines’ profit potential.

Recently, however, the CDC allowed its conditional sail order to expire. Previously, in order to keep their ships, cruise lines had to follow a set of rules imposed by the conditional sail order.

Now that the order isn’t active, Royal Caribbean can operate under a voluntary agreement with the CDC. Plus, the CDC’s risk warning for people taking a cruise has been lowered from level 4 (very high risk) to level 2 (moderate risk).

A Return to Significant Progress

Even prior to the CDC allowing its conditional sail order to expire, Royal Caribbean Cruises was making progress in getting its ships sailing again.

Consider this: by the end of 2021, Royal Caribbean had returned 50 out of 61 of its ships to operations. This represented over 85% of the fleet’s worldwide capacity.

This was achieved in spite of the emergence of the omicron variant last year. Furthermore, a major milestone was marked when Royal Caribbean’s bookings recently returned to pre-omicron levels.

Looking ahead, Royal Caribbean expects to “return the full fleet before the summer season of 2022,” as well as to “be operating cash flow positive in late spring.”

All in all, Royal Caribbean Group President and CEO Jason Liberty considers 2021 to have marked a ” significant progress toward our recovery.”

The company’s fourth-quarter 2021 bookings were sequentially higher than those of the third quarter. Thus, we can see signs that “significant progress” is being made.

The Bottom Line

The watch-word today has been “progress,” not perfection.

Holding RCL stock won’t likely make you wealthy in a day or two, but the path back to pre-Covid-19 levels is getting clearer.

The seas will be choppy and there will be obstacles, so prepare for some volatility along the way. If you’re willing to accept that, then a long-term stock position in Royal Caribbean is definitely worth considering.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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