Royal Caribbean Group stock moved into the red on Thursday afternoon as Hindenburg Research sent out a number of Tweets saying it was short on the cruise operator’s stock.
We are short $RCL, which we believe to be one of the most dislocated “re-opening” stocks on the market today.
The outlook for $RCL and the cruise industry is far more grim than other hospitality and leisure “post-Covid” stories.
— Hindenburg Research (@HindenburgRes) January 6, 2022
This comes after the company had posted a near 20 percent gain since the first reports of a new coronavirus variant in late November dropped cruise stock prices.
Hindenburg Research is known to be a short seller, and has not previously Tweeted out any investment notes on the cruise industry.
In a series of Thursday afternoon Tweets, Hindenburg Research said that the cruise company had added $10.1 billion in debt, now totaling $17 billion which “will be extremely difficult to service, almost necessitating extensive dilution of existing shareholders.”
It also said it believes the CDC “will extend its Conditional Sailing Order, set to expire on January 15, 2022, as telegraphed by the agency’s recent Level 4 Travel Health notice.”
Additionally, it pointed out increased costs, higher operating expenses and higher fuel prices, plus the fact that Royal Caribbean is incorporated in Liberia, and “will eventually come searching for a U.S. bailout, but do not expect it will find one.”
“All told, through a combination of “meme” and “reopening” frenzy, $RCL has remained one of the clearest recent market dislocations despite its obvious business and balance sheet impairments,” the company Tweeted . “We are short.”