Norwegian Cruise Line tanks 15% after warning investors it has 'substantial doubt' it can keep operating (NCLH)
- Shares of Norwegian Cruise Lines tanked more than 15% in Tuesday morning trading after the company warned in an SEC filing that there is "substantial doubt" about its ability to continue operating as it faces a liquidity crunch.
- The coronavirus pandemic has sent shockwaves through the travel industry, with many cruise lines canceling all trips through June.
- The company now expects to report a net loss for both the first quarter and all of 2020.
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Shares of Norwegian Cruise Line Holdings tanked as much as 15% in Tuesday morning trading after the company said in a Securities and Exchange Commission filing that there is "substantial doubt" about its ability to continue operating as it faces a liquidity crunch.
Norwegian's audit firm included a new risk factor related to the coronavirus in its company filings:
"COVID-19 has had, and is expected to continue to have, a significant impact on our financial condition and operations, which adversely affects our ability to obtain acceptable financing to fund resulting reductions in cash from operations."
The company continued: "The current, and uncertain future, impact of the COVID-19 outbreak, including its effect on the ability or desire of people to travel, is expected to continue to impact our results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity, demand for voyages and share price."
Read more: A stock chief at $6.5 trillion BlackRock outlines 5 major themes the pandemic is poised to shape — and why investors should take note of each
The company said the factors above, in combination with debt maturities and other obligations over the next year, lead it to believe there is "substantial doubt" surrounding its ability to "continue as a going concern," as it "does not have sufficient liquidity to meet its obligations over the next twelve months, assuming no additional financing..."
Norwegian filed a shelf registration to raise an undetermined amount of money, which gives the cruise line operator another option to raise cash if or when it needs to.
As of December 31, the company held approximately $6 billion in long-term debt obligations.
Additionally, Norwegian said it does not expect to make any money in 2020.
Shares of Norwegian Cruise line traded down as much as 15% to $12.15 in Tuesday morning trading. Year-to-date, the stock is down more than 75%.
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