NCLH Stock Analysis

Is NCLH Going Bankrupt?

NCLH Stock

NCLH Stock Analysis: Things have looked pretty grim for the cruise lines for a while now.

And a lot of news has been circulating about Norwegian Cruise Lines possibly going bankrupt.

So I would like to clarify what the ‘talking heads’ mean.

Now by no means do I think NCLH is out of the woods just yet, but I would like to walk you through what I’m looking at.

I also want to share why I feel comfortable with my position in NCLH.

NCLH Propositions

So right now Norwegian Cruise Line is raising capital and here’s the basic breakdown of what they’re proposing:

  • They’re are pledging two islands as part of their plan to raise as much as $2 Billion to survive the shutdown.
  • $600 Million in junk bonds that could be priced as soon as today.
  • $650 Million in exchangeable notes
  • $350 Million public offering (shares you and I can buy)
  • $400 Million invest by an affiliate of a private equity firm

As a technical trader, I rely on technical indicators to make my trading decisions. But to help discuss what’s going on with NCLH and my mindset with this trade, I want to spend some time looking at the fundamentals.

And for those that cringe when you hear “Math”, I’m sorry to say it, but math is money. But don’t worry, this is simple math that you can do on your cell phone.

NCLH Stock Financials

Looking at their financials, their:

Current Market Capitalization $2,400,000,000New Shares: $350,000,000

This is a 14.58% increase in shares. Therefore, the stock needs to adjust by taking at least this size of hit. This is why we’re seeing the stock sell off so hard.

NCLH Trade Analysis

So based on the fact that they are being proactive with restructuring and their competitor, CCL announced they have a plan to resume cruises late this summer makes me feel confident we’ll see a bounce back in NCLH.

Now remember, if NCLH falls below $8 I could be at risk of assignment of the stock, which I totally am okay with.

I hope this helps!

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