Important aspects
With the ticker “VIK,” Viking began trading on the New York Stock Exchange on Wednesday at $26.15.
The company’s initial public offering (IPO) and a robust increase in cruise reservations occur simultaneously.
Viking isn’t like other cruise lines.
You won’t find any children on board its more elegant, smaller ships. Actually, the cruise line makes no secret of its intention to target affluent baby boomers.
A casino? Not on these passenger ships.
Viking Holdings made a point of appealing to baby boomer travelers who are looking for adventure and novel experiences by stating in their prospectus that their cruises are for the “thinking person.”
“They possess the resources, including money and time, and I think that when you try to please everyone, you end up disappointed. Nothing that you do is particularly good. We are therefore extremely, extremely focused,” Viking CEO and chairman Torstein Hagen said.
The luxury cruise line was targeting a $10.4 billion valuation in its initial public offering on the New York Stock Exchange on Wednesday, making it the third-largest cruise operator after Royal Caribbean
and Carnival
. Norwegian Cruise Line
is the largest fourth. After pricing at $24 per share, Viking began trading on Wednesday at $26.15 per share under the ticker “VIK.”
It ended the first trading day at $26.10 per share, up more than 8% from the opening.
According to a person familiar with the situation, Viking increased the size of its initial public offering (IPO) when current shareholders chose to sell an extra 9 million shares in response to high demand from mutual fund investors.
Viking operated four ships in 1997. Its fleet has expanded rapidly to comprise 92 ships, 80 of which are river-based vessels that navigate the largest rivers in the world, such as the Nile in Egypt and the Seine in France.
Hagen remarked, “We’re different because the big cruise lines are big in the Caribbean.” “The Caribbean is a small portion of our territory. Europe encompasses the remainder.
A significant increase in cruise reservations aligns with Viking’s IPO timing. Amidst a positive outlook for the industry, Royal Caribbean increased its 2024 guidance on April 25.
In a recent interview, Royal Caribbean CEO Jason Liberty told CNBC that “cruising has really come into the forefront as a competitive choice in travel.” The travel industry is valued at $1.9 trillion worldwide. Of that, $56 billion comes from the cruise industry. In my opinion, cruising has significantly changed since the pandemic.
Despite reporting a net loss for 2023, Viking’s prospectus indicated the company brought in $4.71 billion in sales. The company’s $7,251 revenue per passenger, which is significantly more than that of any other publicly traded cruise line, is what has investors excited. Viking can charge more for each customer because of its premium pricing point.
Investors will also be examining Viking’s expansion strategies in detail. Norwegian Cruise Line announced earlier this month that it had placed an order for eight new ships, which would be delivered over the following twelve years.
There are worries that demand may be hampered by overcapacity due to the extensive portfolios of Carnival, Royal Caribbean, and MSC Cruises. At present, the industry’s attention is centered on how well demand has recovered from the pandemic and that, despite increased costs, cruises remain more affordable than hotel stays on average.
Land-based hotel rates are 25 percent more than in 2019 according to Robin Farley, a leisure analyst at UBS. The same period has seen a 10% increase in cruise line rates.
Cruises and hotels are very different from one another. Farley stated, “Right now, that makes cruise compelling,” said Farley.