Can Viking Holdings Extend Gains from Affluent Cruisers?

Key Points

• Viking Holdings is a luxury cruise operator offering ocean, destination, and river cruises for affluent adult cruisers.
• Viking Holdings saw 14.1% YoY revenue growth in Q1 2024 with net losses of $493 million.
• Viking Holdings makes most of its revenues and profits in Q2 and Q3.

Destination-focused luxury cruise operator Viking Holdings Ltd. NYSE: VIK went public through a $1.8 billion initial public offering (IPO) on May 1, 2024. It was priced at $24 and hasn’t looked back since the IPO. Shares have continued to rise as the company reported its first earnings report as a publicly listed company. Its premium luxury cruises cater to the affluent class of cruisers, which provides it some protection from macroeconomic turbulence. The ships are adult-oriented, offering a more relaxing and sophisticated atmosphere than family-oriented or party cruise lines.

Viking operates in the transportation sector and competes with cruise operators, including Royal Caribbean Cruises Ltd. NYSE: RCL, Norwegian Cruise Line Holdings Ltd. NYSE: NCLH, and Carnival Co. & plc NYSE: CCL.  

Viking Offers River, Expedition, and Ocean Destination Cruises

Unlike the popular cruise operators, Viking doesn't solely offer ocean cruises. They also provide award-winning longships with all the amenities of a luxury hotel designed for river cruises. Viking doesn't try to be all things to all people. They list what Viking is not, which includes of list of things you won't find on their ships, including children under 18, casinos, umbrella drinks, photography sales, nickel and diming, art auctions, charging for Wi-Fi or beer & wine with lunch & dinner and no smoking.

Viking World Cruises: A Whole Different Level

Viking offers world cruises like its Viking World Cruise, which is a 138-day cruise exploring 29 countries and 59 tours starting at $59,995. Its Viking World Voyage I is a 180-day cruise comprised of 86 tours in 38 countries, starting at $79,995. All Viking cruises include a complimentary shore excursion in every port of call, along with 24-hour room service and alternative restaurant dining at no extra charge. Viking World Cruises include business class airfare, all onboard gratuities and service fees, and a Silver Spirits beverage package, including virtually all drinks on board.

VIK Triggers a Parabolic Arc Pattern

The daily candlestick chart on VIK formed a parabolic arc pattern. A parabolic arc is a trend reversal pattern formed on the parabolic price surge to $32.63 from the swing low of $27.60. VIK peaked at $32.63 and pulled back to $29.83 to form a higher swing low. The daily relative strength index (RSI) fell back under the 70-band and is coiling back up to the 66-band. Pullback support levels are at $29.46, $27.60, $26.79, and $25.71.

Viking's Public Debut Performance: Q1 Earnings

Viking reported a Q1 2024 EPS loss of $1.21 or a net loss of $494.9 million compared to a loss of $214.4 million in the year-ago period. The Q1 2024 net loss includes a loss of $330.5 million, and Q1 2023 includes a gain of $15.5 million related to the net impact of the private placement derivative gain and internet expense related to its series C preference shares. Adjusted EBITDA increase by $46.1 million. The Q1 2024 report reflects the seasonality of its business.

Total revenues for Q1 2024 was $718.2 million, up 14.2% YoY. Gross margin was $160.1 million, up 63.2% YoY. Operating capacity is 5% higher for the 2024 season and 12% higher for the 2025 season compared to 2024.

Primary Cruising Season's Impact on Viking Revenues and Profits

Despite operating year-round, the primary cruising season is April to October. Its highest occupancy occurs during the northern hemisphere's summer months. Most revenues and profits are earned in the second and third quarters of the year. Viking closed the quarter with $1.7 billion in cash and cash equivalents, not including proceeds from the IPO. Viking received $245.5 million in net IPO proceeds, with approximately $1.4 billion to certain selling shareholders. Viking will take delivery of two river vessels and one ocean ship this year.

Viking CEO and Chairman Torstein Hagen commented, “We are pleased with our performance in the first quarter, during which we reported a Net Yield of $508, and our strong Advanced Bookings for 2024 and 2025 are equally encouraging.”

Hagen concluded, “At Viking, we remain committed to prioritizing our guests and treating our employees as integral members of our family. We embrace a contrarian approach and steadfastly maintain a long-term perspective when managing our business. Leveraging our momentum, we are dedicated to shaping Viking’s next era to deliver value for all of our stakeholders.”

Viking Holdings analyst ratings and price targets are on MarketBeat.