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Anthropic Flags ‘Existential Risks’ in Long-Awaited IPO Filing · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios.
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  Speaker 6: We're going to get back to this.
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  Speaker 7: Anthropic filing for its IPO to become the first frontier
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  Speaker 7: AI lab to list. Ed Ludlow joins us, Bloomberg Tech
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  Speaker 7: co-host here. Ed, the day has finally come for AI.
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  Speaker 7: This is their time to really get out there and
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  Speaker 7: talk the story. What do you expect to hear from
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  Speaker 7: AI when they go on the road to sell this monster,
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  Speaker 7: monster IPO?
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  Speaker 8: Yeah.
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  Speaker 9: I mean, it's probably easier to start with the things
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  Speaker 9: that are missing from the S1. The obvious things, because
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  Speaker 9: they never are in the S1 when it's public, is
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  Speaker 9: the size of this IPO and the target raise. But
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  Speaker 9: what was interesting as well is, like, there aren't any
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  Speaker 9: really contemporaneous financials. There's no Q3 numbers.
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  Speaker 6: They're out there.
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  Speaker 9: They've been reported. I think what's amazing in the document,
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  Speaker 9: and you know as well as anyone, Paul, right, the
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  Speaker 9: boilerplate does a lot of work. So the risk factors,
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  Speaker 9: the language they have to put in these– But the
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  Speaker 9: really simple story is Anthropic has presented massive, incredible growth
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  Speaker 9: through to the first half of this year or the
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  Speaker 9: nine months through September 30th. But there could not be
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  Speaker 9: a starker warning that that growth won't continue for lots
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  Speaker 9: of reasons which we can get into. And so when
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  Speaker 9: they hit the road, you know, they're going to need
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  Speaker 9: to sort of explain the positive on that, the upside
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  Speaker 9: on that.
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  Speaker 3: Very much big risk, big reward kind of thing.
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  Speaker 7: Yeah.
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  Speaker 3: They're determined, it seems, to go public this year. What
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  Speaker 3: does that say about their need for capital, Ed?
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  Speaker 9: Yeah, I think what's interesting is they have minimum contracted
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  Speaker 9: spending commitments of about $ 250 billion. Those are the things
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  Speaker 9: that they are absolutely on the hook for. But the
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  Speaker 9: way that they explain this is that they have operated
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  Speaker 9: in an environment historically where they are compute constrained. In
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  Speaker 9: other words, they cannot get access to the level of
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  Speaker 9: computing power that they think they need to to service
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  Speaker 9: the current demand for their products. And so if you
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  Speaker 9: go through, whether it's with Amazon, Google, SpaceX, Broadcom, AMD,
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  Speaker 9: the number is actually far greater than $ 250 billion in
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  Speaker 9: what they've lined up to have access to. But the
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  Speaker 9: issue is that they, and they say it again in
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  Speaker 9: the risk language, they are asking the cloud computing providers
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  Speaker 9: to give them more than those cloud computing providers are
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  Speaker 9: willing or able to do. And that's an interesting thing.
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  Speaker 9: So the capital, they did a huge round in May, right?
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  Speaker 1: And we don't know what.
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  Speaker 9: They're going to try and raise in this IPO, but
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  Speaker 9: it's there long term. It's not just they need it
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  Speaker 9: right now.
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  Speaker 7: So one of the key things for an IPO, Ed,
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  Speaker 7: is the quality of management.
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  Speaker 6: You're really betting on management. What do we know about
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  Speaker 6: this management team at Anthropic?
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  Speaker 9: Yeah, so basically things stay the same. Dario Amodei stays
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  Speaker 9: on as the CEO. Daniela Amodei, who is his sister,
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  Speaker 9: remains in the role of president, but also chair of
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  Speaker 9: the board. There is a long-term benefit trust, which appoints
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  Speaker 9: the majority of board members. And then there is an
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  Speaker 9: issue of control. which we are learning about every day
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  Speaker 9: in the world of technology recently. When you look at
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  Speaker 9: what Meta did with its Class C shares. Anthropic has
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  Speaker 9: a group of seven founders. And each of those founders,
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  Speaker 9: those founders collectively will net out with 50, 5, 0.1%
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  Speaker 9: of shareholder voting power. And there are some stipulations about
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  Speaker 9: the common stock they have to hold to do that.
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  Speaker 9: But that is a really interesting outcome when you also
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  Speaker 9: take into account that this is a public benefit corporation structure, right?
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  Speaker 9: And that Anthropic has other philanthropic goals and societal goals
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  Speaker 9: that it's trying to meet while still being a public
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  Speaker 9: company with fiduciary duty to its shareholders.
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  Speaker 3: And if you're open AI, what are you hoping to learn,
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  Speaker 3: not just from this S1 filing, but from the roadshow,
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  Speaker 3: the investor roadshow that Anthropic is about to go on?
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  Speaker 9: You know, Scott, you're the first person to ask me that,
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  Speaker 9: which I'm surprised about. Like, I thought this would come
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  Speaker 9: up sooner. And the answer to your question is, well,
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  Speaker 9: what did Anthropic learn from SpaceX's S1? You know, if
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  Speaker 9: you think about when SpaceX flipped the S1 in May,
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  Speaker 9: they decided to go with this just out-of-this-world total addressable
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  Speaker 9: market number.
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  Speaker 1: Of $ 26.
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  Speaker 9: 5 trillion specifically for AI. Anthropic did not... put any
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  Speaker 9: total addressable market number. They had some brief commentary about
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  Speaker 9: how in 2025, they felt the value, the economic value
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  Speaker 9: of knowledge work from AI was about 40 trillion. So
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  Speaker 9: they've resisted the urge to say, here's the future that
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  Speaker 9: we see too much. I think going into this, all
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  Speaker 9: signs point that Anthropic is going to try and do
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  Speaker 9: this IPO by Thanksgiving. But my understanding from the companies
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  Speaker 9: and from the investor base is that OpenAI was pretty
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  Speaker 9: calm about the idea that Anthropic would go first. and
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  Speaker 9: the open AI would be at some point in 2027.
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  Speaker 9: You know, there's a chronology to it. What did they learn?
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  Speaker 9: Maybe how to choose your risk language.
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  Speaker 3: Exactly.
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  Speaker 10: Stay with us. More from Bloomberg Intelligence coming up after this.
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  Speaker 5: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 5: you get your podcasts or watch us live on YouTube.
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  Speaker 1: The anthropic S1 filing finally dropped.
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  Speaker 11: Boom.
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  Speaker 1: And how many pages was it? I don't know.
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  Speaker 6: I haven't seen it yet. It's still printing.
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  Speaker 3: Okay. Still printing, but we know that the risks section
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  Speaker 3: is really long and it includes things like existential risks
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  Speaker 3: to humanity, including attempts to resist shutdown and conceal or
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  Speaker 3: manipulate information.
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  Speaker 1: I mean, you could write a book on this already
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  Speaker 1: on its own.
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  Speaker 3: Michael Shepard, he is our Bloomberg News Senior Tech Editor
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  Speaker 3: joining us right now. Michael, what do we need to
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  Speaker 3: know about the S1 filing from Anthropic, short of the
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  Speaker 3: risks section.
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  Speaker 1: Just let's start with the business first.
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  Speaker 11: Let's look at the top lines in all of this.
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  Speaker 11: And for our audience, of course, who is leading this IPO? Well,
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  Speaker 11: Goldman Sachs Group and Morgan Stanley. There are 20 other
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  Speaker 11: banks involved. The filing shows The timing on this, we've
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  Speaker 11: been told to expect a formal marketing of the IPO
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  Speaker 11: to begin as soon as the week of November 9.
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  Speaker 11: Anthropic is really trying to get this done before the
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  Speaker 11: end of the year and, in fact, before Thanksgiving. So
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  Speaker 11: this is the timetable that they're on. And it's happening,
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  Speaker 11: of course, even during this time. moment of, let's say,
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  Speaker 11: churn and turmoil surrounding the AI trade and AI market
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  Speaker 11: and all the concerns that maybe some companies are taking
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  Speaker 11: on a little bit too much debt and too much
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  Speaker 11: risk in trying to deploy the technology. But anthropic a
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  Speaker 11: pioneer in developing those models is forging ahead. They emphasized,
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  Speaker 11: of course, that, yes, we talked about the risks, but
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  Speaker 11: they also pointed to their business. They reported having $ 16. 3
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  Speaker 11: billion in revenue for the first six months of this
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  Speaker 11: year versus a loss of $ 80. 7 billion in that same period. Now,
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  Speaker 11: When you look back to the comparable stretch just a
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  Speaker 11: year earlier, they had a $ 13 billion loss on just
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  Speaker 11: $ 1. 2 billion in revenue. So we really are seeing the
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  Speaker 11: trajectory of the business growing very fast, and that also
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  Speaker 11: points to why they may want to get to market
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  Speaker 11: sooner rather than later.
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  Speaker 7: So the company's not making money. Has management said when
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  Speaker 7: they expect to be profitable? Have they indicated that yet?
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  Speaker 11: It's unclear from the filing exactly what that timing is.
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  Speaker 11: And as they market this to investors, we may get
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  Speaker 11: a clearer picture of that. There were sure a lot
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  Speaker 11: of caveats in this, as Scarlett alluded to in the
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  Speaker 11: risk section about all the challenges. that they could face
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  Speaker 11: in terms of their ability to deliver on the promises
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  Speaker 11: of their product. And it really depends so much on
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  Speaker 11: the infrastructure that they need to do all the computing
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  Speaker 11: to continue to advance their cutting edge or so-called frontier models.
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  Speaker 11: And the risks are not only the safety ones that
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  Speaker 11: we've been talking about, but being able to build all
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  Speaker 11: those data centers that are needed to run the models.
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  Speaker 11: And they even point to the risk of opposition there.
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  Speaker 3: So being able to build all those data centers means
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  Speaker 3: they're going to have to spend a lot more money.
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  Speaker 3: And that's partly why they're moving forward with this IPO.
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  Speaker 3: What do we know about how much debt or how
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  Speaker 3: much debt is willing to take on?
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  Speaker 11: Well, that's another great question. And they did point a
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  Speaker 11: little bit to debt in the filing. They said that, well,
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  Speaker 11: to go back to their spending on computing power, they
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  Speaker 11: had put nearly $ 9 billion toward computing power and infrastructure
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  Speaker 11: for the first six months of this year. And that's
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  Speaker 11: almost a fourfold increase from the year earlier. So it
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  Speaker 11: just gives you an idea of of what, um, you know,
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  Speaker 11: the investment that it's putting out and, you know, really, uh,
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  Speaker 11: in the filing, they also talked about just how much
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  Speaker 11: they've expanded their agreements for computing power. And some of
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  Speaker 11: these include a substantial amount of debt, minimum obligations in these, uh,
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  Speaker 11: computing power agreements of $ 417 billion. And those agreements, uh,
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  Speaker 11: will carry out through, uh, As you know, as long
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  Speaker 11: as 2046, some of these are very long term. They
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  Speaker 11: talked about their debt. They said their total debt is
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  Speaker 11: six point two billion as of June 30th. And they
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  Speaker 11: do have a revolving facility above. to $ 15 billion. They
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  Speaker 11: don't have investment grade credit rating yet. So once they
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  Speaker 11: need that, they may be able to make that revolving
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  Speaker 11: loan unsecure. But that still hasn't yet for those who
• 10:15
  Speaker 11: pay close attention to how companies structure their debt.
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  Speaker 1: Stay with us.
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  Speaker 10: More from Bloomberg Intelligence coming up after this.
• 10:25
  Speaker 9: This is Bloomberg Intelligence with Scarlett Fu and Paul Sweeney
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  Speaker 9: on Bloomberg Radio.
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  Speaker 7: All right, Scarlett Philp, Paul Sweeney, we're live here in
• 10:34
  Speaker 7: our Bloomberg Interactive Broker Studio in New York City.
• 10:36
  Speaker 6: We're streaming live on YouTube as well.
• 10:38
  Speaker 7: All right, two years after Donald Trump's promises to bring
• 10:42
  Speaker 7: down the high cost of living helped him get elected
• 10:45
  Speaker 7: to an historic second term, his failure to deliver has
• 10:49
  Speaker 7: disappointed many of the supporters he won over.
• 10:52
  Speaker 1: And that is the.
• 10:52
  Speaker 7: Subject of our big take story today on the Bloomberg Terminal.
• 10:56
  Speaker 7: Mark Nickette joins us here. He's a real economy reporter.
• 10:59
  Speaker 7: for Bloomberg News. What is a real economy reporter covering
• 11:03
  Speaker 7: the intersection of government and politics and the economy? And boy,
• 11:07
  Speaker 7: with the midterm elections a week from tomorrow, that is
• 11:09
  Speaker 7: spot on here. Mark, thanks so much for joining us here.
• 11:12
  Speaker 7: How much is this economy characterized by very good economic growth,
• 11:19
  Speaker 7: full employment, but very high inflation? How much is that
• 11:23
  Speaker 7: going to be a problem for the Republicans here in
• 11:25
  Speaker 7: this midterm?
• 11:28
  Speaker 8: I think it's driving a lot of the campaigns, particularly
• 11:31
  Speaker 8: in these tossed-up Senate races, because the focus that voters
• 11:38
  Speaker 8: have is all on high prices and affordability, even with,
• 11:43
  Speaker 8: as you mentioned, the solid job market and booming stock market.
• 11:48
  Speaker 8: I mean, it's sort of an interesting dichotomy where we
• 11:51
  Speaker 8: have sort of strong economic growth and positive economic indicators.
• 11:55
  Speaker 5: But in particular, the.
• 11:57
  Speaker 8: High prices for gasoline and diesel are really driving negative
• 12:04
  Speaker 8: consumer sentiments and backlash really against Republicans because of Donald
• 12:10
  Speaker 8: Trump's promises to bring down prices on day one if
• 12:13
  Speaker 8: he was elected to a second term.
• 12:15
  Speaker 6: And it's interesting.
• 12:16
  Speaker 7: I mean, it must be frustrating for the Republican National Committee.
• 12:19
  Speaker 7: I always highlight that because some of his policies are
• 12:22
  Speaker 7: direct contradiction to that. Thinking simply about tariffs. Obviously, most
• 12:27
  Speaker 7: economists say that is a tax on the U.S. consumer,
• 12:29
  Speaker 7: higher prices to some degree. And then starting a war
• 12:32
  Speaker 7: in the Middle East, which not unexpectedly drives up the
• 12:36
  Speaker 7: cost of energy on a global scale. How is the
• 12:40
  Speaker 7: president trying to kind of work around those issues?
• 12:45
  Speaker 8: Well, he's been really, as far as the war is concerned,
• 12:48
  Speaker 8: been really focused on the message that prices are going
• 12:52
  Speaker 8: to come down quickly once the Iran war is settled.
• 12:57
  Speaker 8: He's been doing rallies almost every day leading up to
• 13:01
  Speaker 8: the midterms and essentially saying the same thing, that sure,
• 13:06
  Speaker 8: your gas prices might be high now, but one, it's
• 13:09
  Speaker 8: a small price to pay for denying Iran from getting
• 13:14
  Speaker 8: a nuclear weapon, but also that prices are going to
• 13:16
  Speaker 8: come down really quickly. The problem, of course, is that
• 13:20
  Speaker 8: the conflict has continued much longer than the administration promised
• 13:26
  Speaker 8: at the beginning, at the outset. And there's even concerns
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  Speaker 8: that we'll see an escalation in fighting after the midterms.
• 13:34
  Speaker 8: So it's sort of a tough needle for the president
• 13:38
  Speaker 8: to thread because on the one hand, he can talk
• 13:40
  Speaker 8: about prices coming down once the conflict is resolved, but
• 13:45
  Speaker 8: there's no clear indication of when that's going to happen.
• 13:48
  Speaker 8: And meanwhile, consumers are seeing high prices at the pump,
• 13:51
  Speaker 8: you know, every day when they drive past the gas stations.
• 13:54
  Speaker 2: Yeah, absolutely.
• 13:55
  Speaker 7: So, Mark, we've seen President Trump pretty aggressively out on
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  Speaker 7: the campaign trail on a daily basis over the last
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  Speaker 7: several weeks, and the expectation now will continue through Election Day.
• 14:05
  Speaker 7: What are the folks down ballot? How are they embracing
• 14:07
  Speaker 7: the president? How are they using the president, given that
• 14:10
  Speaker 7: his polling numbers are so low, given that many of
• 14:13
  Speaker 7: his policies have driven up pressures here?
• 14:17
  Speaker 8: It's kind of a difficult balancing act, particularly in states
• 14:21
  Speaker 8: that have toss-up Senate races or these, you know, really
• 14:24
  Speaker 8: competitive swing congressional districts. Because on the one hand, the
• 14:29
  Speaker 8: Republicans need strong turnout from the Trump supporters in particular
• 14:34
  Speaker 8: and the Republican base in general. So, you know, they
• 14:38
  Speaker 8: don't want to distance themselves too much from Trump because
• 14:44
  Speaker 8: they need sort of Trump's help to get their voters
• 14:47
  Speaker 8: to turn out. On the other hand, Trump's also a
• 14:50
  Speaker 8: motivating factor on the other side in encouraging Democratic participation,
• 14:54
  Speaker 8: if nothing else, to put a check on the final
• 14:58
  Speaker 8: two years of the Trump administration. And there's been a
• 15:04
  Speaker 8: push by some Republicans in these competitive districts to sort
• 15:08
  Speaker 8: of back away from the Trump or at least not
• 15:10
  Speaker 8: emphasize their connections to Trump or even, you know, promoting
• 15:13
  Speaker 8: their willingness to oppose the president if they think that
• 15:17
  Speaker 8: will help them in these districts with, you know, independent voters.
• 15:21
  Speaker 7: And Mark, in this story, you guys interview a gentleman
• 15:24
  Speaker 7: in McAllen, Texas. He's on his lunch break from a
• 15:27
  Speaker 7: retail job. And his quote is, I thought stuff was
• 15:30
  Speaker 7: going to get cheaper and that life was going to
• 15:33
  Speaker 7: be better, but that never happened.
• 15:35
  Speaker 6: End quote.
• 15:36
  Speaker 7: How common is that kind of thinking in different parts
• 15:40
  Speaker 7: of the country?
• 15:42
  Speaker 1: It's pretty common.
• 15:42
  Speaker 8: It's pretty common among different demographic groups. We looked at
• 15:48
  Speaker 8: demographic groups that had big swings to Donald Trump in
• 15:52
  Speaker 8: 2024 from 2020, primarily Latinos. low-income voters and.
• 16:02
  Speaker 2: Young voters.
• 16:03
  Speaker 8: And we saw a big shift, I think, of those
• 16:06
  Speaker 8: voters to Trump because of the economy, the expectation that,
• 16:12
  Speaker 8: or the belief at least, that Trump would be better
• 16:14
  Speaker 8: on the economy than Kamala Harris. And also, you know,
• 16:19
  Speaker 8: Donald Trump was promising throughout the campaign that he would
• 16:22
  Speaker 8: bring down prices immediately and fight inflation. So while these
• 16:26
  Speaker 8: voters swung to Trump in 2024 because of the economy,
• 16:31
  Speaker 8: their disappointment in the fact that prices have not come
• 16:33
  Speaker 8: down is sort of driving them away from Republicans this cycle.
• 16:36
  Speaker 6: Stay with us.
• 16:37
  Speaker 10: More from Bloomberg Intelligence coming up after this.
• 16:43
  Speaker 5: You're listening to the Bloomberg Intelligence Podcast.
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  Speaker 1: Catch us live weekdays at 10 a.m.
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  Speaker 5: Business App. Listen on demand wherever you get your podcasts
• 16:55
  Speaker 5: or watch us live on YouTube. All right, I.
• 16:58
  Speaker 7: Took my first cruise on a Viking cruise ship. Had
• 17:01
  Speaker 7: a good time on the Sun River. I think we
• 17:03
  Speaker 7: actually put a deposit down for something else.
• 17:04
  Speaker 9: Wait, really?
• 17:05
  Speaker 6: Yeah, I think so.
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  Speaker 1: When did you do that? Like a day in, towards
• 17:08
  Speaker 1: the end?
• 17:10
  Speaker 6: After, I think.
• 17:11
  Speaker 1: Oh, okay.
• 17:11
  Speaker 6: But yeah, so anyway, so we're locked in again.
• 17:14
  Speaker 1: He's a lifer now.
• 17:15
  Speaker 6: So I guess.
• 17:16
  Speaker 7: The other person I know that knows this cruise business
• 17:19
  Speaker 7: and appreciates it is Jody Laurie. She's a senior credit
• 17:21
  Speaker 7: analyst for Bloomberg Intelligence. She follows all these consumer-facing kind
• 17:25
  Speaker 7: of fun companies, think casinos, hotels, cruise ship lines, all
• 17:28
  Speaker 7: that kind of good stuff. They need capital to grow.
• 17:31
  Speaker 6: That's particularly the case for these cruise liners.
• 17:33
  Speaker 7: Jodi, thanks so much for joining us here. Talk to
• 17:35
  Speaker 7: us about Norwegian cruise lines. I know you keep close
• 17:38
  Speaker 7: tabs on that credit profile. What are you seeing from Norwegian?
• 17:43
  Speaker 4: So I think, Paul, the thing about Norwegian is that
• 17:46
  Speaker 4: they've been lagging. their peers in terms of the deleveraging story.
• 17:51
  Speaker 4: So you talk about Viking, they have some of the
• 17:53
  Speaker 4: lowest leverage in terms of debt leverage across the board.
• 17:57
  Speaker 4: And by this, we mean is that management took the
• 18:00
  Speaker 4: strategy of trying to grow margins, grow EBITDA in order
• 18:04
  Speaker 4: to delever as opposed to actively repaying debt. And that
• 18:08
  Speaker 4: sort of put them in a little bit of a
• 18:10
  Speaker 4: challenging situation, you know, especially for someone like Norwegian, that's
• 18:13
  Speaker 4: a When they're cutting costs, you sort of wonder what
• 18:17
  Speaker 4: kind of quality service they have as a result.
• 18:24
  Speaker 3: Whoops, didn't press the mic in time. So how do
• 18:26
  Speaker 3: they move forward with that kind of situation? How do
• 18:29
  Speaker 3: you see them using their financials to their advantage?
• 18:34
  Speaker 4: So, Scarlett, I think the challenge is what are they
• 18:37
  Speaker 4: going to do next?
• 18:39
  Speaker 2: And something that we.
• 18:40
  Speaker 4: Did as an exercise a few days ago was looking
• 18:42
  Speaker 4: at Norwegian and comparing it to Caesars. And you think, okay,
• 18:46
  Speaker 4: gaming company versus cruise line, yes, there's gaming on cruises,
• 18:51
  Speaker 4: but what do they have to do with one another? Well,
• 18:53
  Speaker 4: in fact, we actually see that their stories are a
• 18:56
  Speaker 4: little bit similar in a lot of ways.
• 18:58
  Speaker 2: You know, they're operators within a very sort of.
• 19:02
  Speaker 4: Al Gopli kind of industry, right? You know, you have
• 19:05
  Speaker 4: a couple of key players. They've been lagging their peers.
• 19:08
  Speaker 4: Both of them have been beating the drum on deleveraging,
• 19:11
  Speaker 4: on improving their balance sheet, but haven't quite hit the mark.
• 19:15
  Speaker 4: And now Caesars is getting taken private by Fertitta. or
• 19:19
  Speaker 4: potentially taken private, you know, it's moving along. And Norwegian,
• 19:22
  Speaker 4: you know, is also a company that was private at
• 19:25
  Speaker 4: one point.
• 19:26
  Speaker 2: They are lagging.
• 19:28
  Speaker 4: They now have a new CEO and you sort of wonder, okay,
• 19:31
  Speaker 4: what are they going to do next in terms of
• 19:33
  Speaker 4: the company? They've been selling off assets. They've been entering
• 19:36
  Speaker 4: into these charter agreements as well to increase their cashflow
• 19:40
  Speaker 4: and to get a little bit more creative with their
• 19:42
  Speaker 4: balance sheet. But I'm not quite sure what that means
• 19:46
  Speaker 4: for Norwegian short-term and long-term.
• 19:49
  Speaker 2: Talk to us about it.
• 19:50
  Speaker 7: Just the fundamentals of the cruise business in general. Like, John,
• 19:53
  Speaker 7: you'll appreciate this. I did take the free, you know,
• 19:55
  Speaker 7: all the booze included option.
• 19:58
  Speaker 3: Oh, you definitely have to do that.
• 19:59
  Speaker 6: You know, I cost Viking a lot of money on
• 20:01
  Speaker 6: that one.
• 20:02
  Speaker 7: They're going to have to talk about that in their
• 20:03
  Speaker 7: quarterly results. Talk to us about the fundamentals just of
• 20:06
  Speaker 7: the cruise business in general. It seems like the demand
• 20:08
  Speaker 7: story Remains pretty darn strong, but boy, the feel's got
• 20:11
  Speaker 7: to be a big issue for them.
• 20:13
  Speaker 8: Yeah.
• 20:13
  Speaker 2: Yeah, Paul.
• 20:14
  Speaker 4: I mean, you know, taking the beverage package, if you
• 20:17
  Speaker 4: like to drink quite a bit, does help you.
• 20:21
  Speaker 2: But, you know, most people, I don't know if you
• 20:23
  Speaker 2: could hit the mark, but I'm just kidding.
• 20:26
  Speaker 4: So in terms of costs, in terms of, you know, appetite,
• 20:30
  Speaker 4: we are seeing that bookings are still very strong. We've
• 20:33
  Speaker 4: seen a few blips along the way as a result
• 20:35
  Speaker 4: of the Iran war, as a result of fuel prices,
• 20:38
  Speaker 4: as a result of consumers just getting a That said,
• 20:43
  Speaker 4: we've seen momentum still in bookings. The exception being the
• 20:47
  Speaker 4: Norwegian brand management made a comment that it's lagging what
• 20:51
  Speaker 4: they expected in terms of bookings. And I think that's
• 20:54
  Speaker 4: problematic when you compare that to even Viking or Royal
• 20:58
  Speaker 4: or Carnival that have been communicating that bookings have been
• 21:01
  Speaker 4: rather strong. From a fuel perspective, it really is a
• 21:05
  Speaker 4: difference of stories among the companies in terms of strategies.
• 21:08
  Speaker 4: Some of them, such as Royal and Norwegian, are both
• 21:11
  Speaker 4: at least partially or fully hedged for what they expect
• 21:14
  Speaker 4: to spend. Some of them Like Carnival, it's a little
• 21:17
  Speaker 4: touch and go depending on the situation. And so that
• 21:20
  Speaker 4: does definitely creep into it, but they do benefit from
• 21:25
  Speaker 4: this onboard spending that creates a cash flow to offset
• 21:29
  Speaker 4: some of it.
• 21:31
  Speaker 3: So when it comes to the bookings out in advance,
• 21:35
  Speaker 3: what prompts customers to cancel some of their bookings? I
• 21:38
  Speaker 3: know that they book out a year, maybe a year
• 21:40
  Speaker 3: and a half out. Do we have a track record
• 21:43
  Speaker 3: of how often people say, oh, I can't actually go
• 21:46
  Speaker 3: on this or I'm going to delay this?
• 21:49
  Speaker 2: So a good portion, Scarlett, actually will go on their cruises.
• 21:53
  Speaker 4: You know, people who book cruises in advance say, I'm
• 21:55
  Speaker 4: going on this cruise. The only reasons why it will
• 21:58
  Speaker 4: change is obviously if they have a personal situation or
• 22:01
  Speaker 4: if the cruise company has to cancel that specific charter. Now,
• 22:05
  Speaker 4: what the cruise companies try to do is they encourage
• 22:08
  Speaker 4: onboard or they encourage a credit as opposed to a
• 22:12
  Speaker 4: full cancellation, right? A lot of the times past a
• 22:15
  Speaker 4: certain point, you only get a partial refund back. But
• 22:19
  Speaker 4: even if you do get a full refund, a lot
• 22:20
  Speaker 4: of times the companies will say, well, actually, how about
• 22:22
  Speaker 4: you just rebook to a different cruise? We do have examples,
• 22:26
  Speaker 4: especially this weekend, of situations that went a little bit differently,
• 22:29
  Speaker 4: such as the cruise that was supposed to go to
• 22:31
  Speaker 4: the Bahamas and the weather caused them instead to go
• 22:34
  Speaker 4: to Canada. And the cruise companies will make it right
• 22:37
  Speaker 4: by giving you some onboard credit. Now, of course, going
• 22:39
  Speaker 4: to Halifax isn't as luxurious as going to, say, Grand
• 22:43
  Speaker 4: Cayman or the Bahamas or what have you.
• 22:47
  Speaker 2: Some are warm.
• 22:47
  Speaker 4: But I would probably venture to guess that most people
• 22:50
  Speaker 4: are grateful that they're not going to a Bermuda Triangle
• 22:53
  Speaker 4: situation and then ending up lost at sea.
• 22:55
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