Core Viewpoint - Royal Caribbean (RCL) is experiencing a significant stock slump, currently about 30% below its 52-week high, but there are expectations for recovery in 2026 as new offerings develop and Caribbean yields potentially improve [2][4]. Financial Performance - Despite the stock decline, Royal Caribbean's financial health remains solid, with gross leverage expected to stay in the low 3x range and access to a $6.4 billion revolving credit facility [10]. - The company is reducing debt, which lowers interest expenses, while also growing free cash flow, supporting a $1 billion buyback plan announced in February [11]. Market Dynamics - The cruise industry, particularly in the Caribbean, is highly competitive, which has raised concerns about Royal Caribbean's yield potential for 2026. However, the company anticipates yield growth of 2% to 3% in that region [6][7]. - A 1% change in Caribbean yields could impact Royal Caribbean's market value by approximately $1.2 billion, indicating that a 3% increase could add $3.6 billion to its market capitalization [7]. Stock Performance - Year-to-date, Royal Caribbean's stock is up about 12%, but the recent sell-off has led to a bear market scenario for the stock [1][2]. - The current stock price is $278.86, with a market capitalization of $76 billion [9].