What’s New With Royal Caribbean Stock?

RCL: Royal Caribbean Cruises logo
RCL
Royal Caribbean Cruises

Royal Caribbean stock (NYSE: RCL), the second-largest cruise line operator, has declined by almost 17 % over the last month (21 trading days), compared to the broader S&P 500 which has gained about 3% over the same period. The stock also remains down by about 5% over the last week (five trading days). Although the Covid-19 pandemic-related headwinds eased a bit for travel and leisure stocks in general, there appear to be mounting macroeconomic challenges for cruise line players such as Royal Caribbean. Oil prices have remained elevated, given the ongoing geopolitical issues, with Brent crude trading at over $100 per barrel currently, up almost 35% year-to-date, and this is likely to put pressure on the company’s profitability. Moreover, with inflation surging (about 9.1% in June), the U.S. Federal Reserve has embarked on a path of aggressive rate hikes, which are very likely to push the U.S. into a recession. Consumer sentiment has also slumped to record lows as surging prices take a toll on household finances and this could impact companies such as Royal Caribbean who are dependent on discretionary spending. An economic downturn could weigh down RCL stock, which remains one of the most heavily indebted players in the cruising industry, with over $22.5 billion in debt as of March.

Given that RCL stock has declined by 17% over the last month, will it continue its downward trajectory, or is a recovery imminent? Going by historical performance, there is a roughly 58% chance of a rise in RCL stock over the next monthOut of 110 instances in the last ten years that RCL stock saw a twenty-one-day decline of 17% or more, 64 of them resulted in RCL stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 64 out of 110, or a 58% chance of a rise in RCL  stock over the coming month. See our analysis on RCL Stock Chance of A Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last ten years’ data

  • After moving -4.9% or more over a five-day period, the stock rose in the next five days on 54% of the occasions.
  • After moving -6.2% or more over a ten-day period, the stock rose in the next ten days on 56% of the occasions.
  • After moving -17% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 58% of the occasions.
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This pattern suggests that there is a reasonable chance of a rise in RCL stock in the near term.

With inflation rising and the Fed raising interest rates, RCL stock has seen a fall of 59% this year. Can it drop further? See how low Royal Caribbean stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jul 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 RCL Return -6% -57% -60%
 S&P 500 Return 1% -20% 70%
 Trefis Multi-Strategy Portfolio 3% -21% 216%

[1] Month-to-date and year-to-date as of 7/16/2022
[2] Cumulative total returns since the end of 2016

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