馃攳
Norwegian Cruise Line Stock Analysis - Bankruptcy or Phoenix From The Ashes? - YouTube
Channel: unknown
[0]
I want to talk about the NCLH trade.
[2]
So Zia says, "NCLH
[4]
is considering bankruptcy.
[5]
So why did you trade it?"
[8]
Zia, that is not correct.
[9]
They are not considering bankruptcy
[12]
at all, not at all.
[14]
So let's talk about NCLH
[16]
and why I entered
[18]
this trade, and why I actually
[20]
do like the trade even
[22]
though right now it
[24]
is down $500-$600.
[26]
But again, keep in mind that this
[28]
account that I'm trading here is
[29]
$36,000, so this is
[31]
really not a big deal.
[32]
Okay. So let's take
[34]
a look at NCLH and why
[36]
I traded this.
[37]
I've been trading NCLH in the past
[39]
and really liked it, here's why.
[41]
NCLH was a stock that has been
[42]
trading around 50 to 55.
[45]
Then we had this virus going on
[46]
and as you can see, they plummeted
[49]
down.
[50]
They found a bottom here and this is
[52]
when again, they popped back up.
[53]
This is what has been happening over
[55]
the past few months.
[56]
Then there were some bad news they
[57]
were going down, they popped back
[59]
up, we're going up and now
[61]
today they're down 23%.
[64]
So what is happening here?
[67]
Why did they drop so much?
[68]
And why do I still believe
[71]
that this is a really good trade?
[73]
So, first of all, today
[75]
the news broke, 2 news.
[76]
First of all, Carnival Cruise Lines
[78]
said we are going to resume
[80]
our operations on August
[82]
1st. Now, we don't know how many
[84]
people will go on a cruise.
[86]
But I do believe that
[88]
this will definitely help them to
[90]
make some money to bring in some
[91]
revenues again.
[92]
The other two cruise lines, Royal
[94]
Caribbean and Norwegian Cruise Lines
[96]
have not yet announced it, but they
[98]
are expected to say, make a similar
[99]
statement over the next few days.
[101]
Back to where Zia said,
[103]
"Don't they file for bankruptcy?"
[105]
Not at all.
[107]
So here is what happened today.
[108]
This is a report from Bloomberg.
[110]
So Norwegian Cruise Lines is
[112]
pledging ships and two islands
[114]
as part of a plan to raise as much
[116]
as 2 billion dollars
[118]
to survive the travel industry's
[119]
shut down. So they are actually
[122]
raising money.
[124]
And they say exactly here is
[125]
how we are planning to do it.
[127]
So they are selling 600
[129]
million dollars of junk bonds, they
[131]
are raising another
[133]
650 million dollars of exchangeable
[135]
notes, and a public
[138]
offering of 350
[140]
million ordinary shares, the regular
[141]
shares that you and I can buy, and
[144]
a 400 million investment by
[146]
an affiliate of a private equity
[148]
firm, L Catterton,
[150]
no idea. Here's the deal.
[151]
This has nothing
[153]
to do with bankruptcy.
[154]
All this means right now is,
[157]
yes, we do need
[158]
money, and here we have a plan.
[161]
Here is how we are getting two
[163]
billion dollars doing
[165]
this, number one, number two, number
[167]
three, number four, Number five,
[168]
okay? So this is a very concrete
[170]
plan.
[171]
Now you might be wondering if they
[172]
put such a concrete plan in motion,
[174]
why at this point, are
[176]
shares plummeting?
[178]
Very, very easy, and this is why
[180]
I liked where I bought it this
[181]
morning, didn't expect to go much
[183]
further down.
[184]
But so here's what exactly happened.
[186]
We need our handy-dandy notebook to
[188]
do some math because you already
[189]
know this money
[191]
is math.
[193]
Sorry, the good news is that the
[195]
math that we are doing here is
[197]
just very simple math.
[198]
It is math that you can do on your
[200]
iPhone here so no big
[202]
deal. But let's take a look
[204]
at NCLH.
[205]
And here's what I want to look at, I
[207]
want to look at their financials.
[208]
And looking at their financials here
[210]
is what I see.
[211]
The market capitalization right
[213]
now is 2.381
[217]
billion. So this is the first thing
[219]
that we want to write down.
[221]
The current market cap is, let's
[223]
say around 2,400
[226]
million dollars.
[227]
OK. So $2.4 billion
[229]
dollars, 1 billion is 1,000
[232]
million. So
[234]
2.4 million dollars.
[235]
Now, what did they just say?
[237]
What do they want to do?
[238]
They want to actually raise another
[242]
350 thousand dollars through
[244]
ordinary shares, the same
[246]
shares that they have here
[248]
right now being traded.
[249]
New shares will be 350
[252]
million dollars.
[254]
That's what they announced, right?
[255]
You're with me thus far? Is this
[256]
making sense?
[257]
If so, give me a thumbs up.
[259]
So in percent, how much
[261]
is this in percent?
[262]
So we need to do some basic
[264]
math and we take 350
[267]
divided by 2,400,
[269]
so this means 14.58%.
[273]
So this is what they're bringing on.
[275]
This is how many more shares they're
[276]
dumping into the market.
[277]
What does this mean?
[279]
Well, it means that now, obviously,
[281]
if the price yesterday was trading
[283]
at a certain level, that right
[285]
now this price needs
[287]
to go down by at least 14.58%.
[292]
This is how it works.
[294]
OK. So let's jump onto
[296]
the charts here right now and let's
[298]
take a look at NCLH of
[300]
where they closed yesterday.
[302]
It was at
[305]
$14.44. So now
[307]
today, obviously, what needs
[308]
to happen?
[309]
When they announce it, the share
[311]
price has to drop by
[313]
how much? Well, you guessed it, by
[317]
14.58%. So this means that today
[320]
the price should have dropped
[322]
to $12.27.
[325]
So this is what it should
[327]
have dropped.
[328]
Now, let's see where they are
[329]
trading right now.
[330]
So right now, as you can see, they
[332]
are trading at $11.18.
[335]
So what happened?
[336]
So why are they trading much lower
[338]
than they should? First of all, a
[341]
14.5% drop would have been
[343]
absolutely normal.
[344]
However, this is where many
[345]
traders misunderstand
[348]
of what is actually happening.
[350]
And this is why today
[352]
when some traders saw NCLH
[354]
dropping by
[356]
14.5%, which they had
[358]
to do, there's no other way,
[360]
this is when there was some
[362]
additional selling kicking in.
[364]
Now, I want to show you what
[365]
happened here this morning.
[366]
And let's take a look at a 5-minute
[368]
chart. So as you can see here this
[370]
morning, they opened at $13.10.
[372]
This is where they should have been
[373]
trading.
[374]
This is what happened this morning.
[375]
They traded right there where they
[377]
should have been trading for the
[378]
first few minutes and then
[381]
probably Zia and a few
[383]
others thought, "Ahh, they're in
[384]
trouble." And then there was some
[386]
panic selling coming in.
[387]
And then it bounced right back
[388]
because everybody realized, "Oh,
[390]
that's what they're doing.
[391]
They're raising more money.
[393]
I got it." OK?
[395]
And they have been trading around
[396]
this price here for most of the day
[398]
as you can see.
[400]
So this is why I
[401]
still like this trade
[403]
and why I do believe that
[405]
they might bounce back.
[406]
So that's what I see here on the
[408]
chart. Now, if they do go down
[410]
to $8 am I okay
[412]
owning this stock?
[414]
Absolutely.
[415]
But right now, so you see, they
[417]
did a few things that I think are
[418]
really important. Three things
[420]
that make me believe that
[422]
NCLH is a really good investment.
[424]
Number one, one of their competitors
[427]
already said, "we are resuming
[428]
normal operations August 1st." So
[430]
I'm pretty sure that they will do
[432]
the same fairly quickly.
[434]
Number two, they are restructuring
[437]
debt, they know that they need
[439]
money.
[440]
And last month they said, "Oh, we
[442]
have money for the next 6 to 8
[443]
months," but they are being
[445]
proactive right now.
[446]
That's good, right?
[447]
So they don't wait until bankruptcy.
[450]
Number three, today, they furloughed
[452]
20% of their shore
[454]
staff. So, of course, it's always
[456]
horrible when companies
[458]
lay off people, and
[460]
for NCLH, that means that right
[462]
now they are decreasing
[464]
their monthly costs.
[466]
Is this making sense?
[467]
So this is why I still
[469]
like the NCLH trade.
[471]
And when I plopped it into the put
[473]
options calculator, it seemed that I
[475]
can get $140
[477]
a day by doing this.
[479]
And my goal is $108
[481]
per day per position.
[482]
Is this making sense?
[483]
So Zia and everybody else
[485]
who is wondering about,
[487]
"Are they going bankrupt?" No,
[489]
not at all.
[490]
OK, so hope that helps.
[492]
This is why I wanted to share why
[494]
I like NCLH here,
[496]
as a trade, and why I'm
[498]
okay having it in the portfolio
[500]
even though right now it is going
[502]
slightly against me, you have seen
[504]
it, down $500-$600
[506]
really not a big deal.
[508]
I'm getting more concerned when a
[509]
trade is going $2,000 against
[511]
me, that's when I'm looking for
[513]
rescue missions.
[514]
If you enjoyed this video and you
[516]
would like to see other videos,
[517]
click on subscribe here and
[519]
hit the little notification bell
[521]
this way you get notified whenever I
[522]
release a new video.
[524]
And there's probably a few videos
[525]
popping up on the screen right now
[527]
if you want to continue watching
[528]
videos. Just click on any
[530]
of these videos that make the most
[532]
sense to you.
[533]
All right. Hope this helps.
[534]
And I'll see you in the next video.
Most Recent Videos:
You can go back to the homepage right here: Homepage