Royal Caribbean Shares Fall After Hindenburg Research Discloses Short Position

Shares of Royal Caribbean are under pressure after noted short-seller Hindenburg Research announced in a series of Tweets that it was shorting the cruise line. 

In a series of tweets, Hindenburg said that RCL was one of the most dislocated “re-opening” stocks on the market today and said that the outlook for the cruise industry “is far more grim than other hospitality and leisure” industries.

Hindenburg pointed out the company’s ballooning liabilities and share count, saying the company’s current debt would be “extremely difficult to service, almost necessitating extensive dilution of existing shareholders”.

The firm also pointed to increased fuel costs, vaccination mandates and the CDC’s Conditional Sailing Order as headwinds.

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

As far as low hanging fruit for short sellers as part of the post-Covid re-open trade, Royal Caribbean may be at the top of the list since it returned 3% in 2021, while Carnival and Norwegian Cruise Line Holdings fell 7.1% ad 18% respectively, according to Bloomberg.

The stock traded down more than 3% following the report before recovering some losses.