Viking Holdings jumps 10% above its IPO pricing level in opening trading

Viking Holdings Ltd (NYSE:VIK) opened for trading at $26.15 after the company’s IPO was priced at $24 per share. In the first few minutes of trading, the stock swapped hands as high as $26.83. The current valuation on Viking Holdings (VIK) is $11.3B, compared to the market caps of $18.6B for Carnival (CCL), $8.12B for Norwegian Cruise Line (NCLH), and $35.9B for Royal Caribbean (RCL).

The cruise liner operator disclosed in an SEC filing that in 2023 it reported a loss of $1.85B on $4.7B in revenue as cruise operating expenses increased by 33% to $2.85B. Adjusted EBITDA loss widened to $1.09B from $367M in 2022 and the adjusted EBITDA margin expanded to 35.5% from 18.4% the year prior. As of December 31, Viking (VIK) had $1.3B in cash, $11.4B in total liabilities, and free cash flow of -$673 for the preceding 12-month period. Viking (VIK) started in 1997 with just 4 river cruise ships but has expanded to 84 ships in operation with 650K passengers in 2023.

The IPO is generating some positive buzz from investors due to the niche aspect of the company’s business. Notably, Viking (VIK) caters to older cruise line customers looking for a quieter, high-end experience. Viking cruises do not allow children under 18 and have no casinos. Instead of promoting a party atmosphere, Viking proclaims to be a global leader in experiential travel by exploring all seven continents, all five oceans, and more than 20 iconic rivers. Crucially, Viking said its single-brand focus has helped with customer retention.

In Viking’s F-1 SEC filing, the company also noted that demographics are working in its favor.

“The U.S. population aged 55 years and older comprises 30% of the total population, has the largest spending power of any demographic based on annual expenditures and holds over 70% of U.S. wealth as measured by the U.S. Federal Reserve. The U.S. population aged 55 years and older is also the fastest growing segment of the population, with expected growth from 98 million people in 2020 to 110 million people in 2030, according to the Congressional Budget Office.”