October 31 is the day cruise lines have been waiting for…
We see some optimism in the travel sector.
The entire U.S. travel industry employed 15.8 million Americans, about one out of every ten jobs, before the pandemic. But its onset wiped out 51% of them. And relief hasn’t come to some essential travel businesses.
On top of this, the impact on hotels has been too severe. The hotel industry has already lost 2 million of the 8.3 million jobs it had before the pandemic. That’s a massive drop, and as of right now, we do not see much light at the end of the tunnel.
And cruise lines aren’t having an easy time either. Earlier this week, Royal Caribbean Group announced that it’s raising $1 billion in two $500 million offerings – including one stock and one debt in hopes of finding a lifeline for the struggling company.
Where’s the money?
Following the news, shares of cruise companies took a beating, with Royal Caribbean leading the pack. RCL dropped 13.2% following the announcement. And they weren’t alone – Norwegian Cruise Line Holdings fell 7.3%, and Carnival Corp declined 7.2%. This made these three stocks the three biggest decliners on the day.
But it wasn’t all bad news – and a big day for the industry is currently coming. On March 14, the Center for Disease Control and Prevention issued a no-sail order for the sector that would remain in place until October 31. This halted the company’s primary revenue stream for nearly nine months. But the CDC has yet to announce if this ban will be extended.
And with bookings on the rise and continuing to improve, this day will help paint a clearer picture of the industry’s future. But here’s how you should play that optimism…
How do I get some?
No, no, no is what I say when it comes to investments in most retail, cruise, or casino companies. Because when it comes to these industries, their future is controlled by one thing – a vaccine. And while companies are working around the clock to develop one – no one really knows when one will hit the market.
And that means one thing – the future of these types of industries is uncertain.
So, while bookings may be on the rise and there is a possibility of the “no sail “ban being lifted – I’m still going to be betting against the rebound of Royal Caribbean. Because even as the stock market has been moving higher, we’ve continued to see this stock struggle to keep up. This is why I will be looking to buy put spreads on Royal Caribbean. And this will allow me to set myself up for quick profits while protecting my bottom dollar.
In the spotlight: Another way the airline industry is being impacted…
Yesterday, we talked about how Delta delivered disappointing earnings – reporting millions of dollars in loss. But Delta isn’t alone in its struggle – Boeing is feeling the heavyweight of the pandemic implications as well.
The aircraft maker reported weak deliveries and a lapse in orders in September. In fact, Boeing only delivered only 11 commercial jets last month. Three of these jets were freighters, and one was a passenger aircraft for the military. When you add this past month to the total orders, it means that the company has delivered 98 commercial planes to customers so fast in 2020. That is less than a third of what it delivered in 2019 in the same nine-month period.
On top of the lack of orders, three orders were also canceled for 737 Max – a model that continues to cause the company problems. With these three new cancellations, the total cancellations tally up to 229 orders, almost all have been the 737 Max model.
A tough year for Boeing now doubt, but truthfully, the airline industry as a whole is being hit hard by the current situation. And there’s not much hope in sight.
The Rough Reports Continue
As some businesses and industries as wholes are slowly getting back on track, the outlook for airlines, cruise lines, and travel in general still looks pretty bleak.
While these industries struggle, some have thrived during the pandemic…
And my S.C.A.N. trading algorithm continues to pick out the best profit opportunities in each of them.
Online retail has exploded, but S.C.A.N. just delivered a recommendation that’s NOT the obvious stock in this industry.
To learn the name of the online luxury fashion retail platform that just checked all of S.C.A.N.’s boxes – and the rest of the picks I’m looking at – click here now.