Will Carnival Stock Recover?

Will Carnival Stock Recover? After more than a year of being warned about the dangers of being confined in close quarters with large groups of people, it’s easy to see why the cruise ship industry has been one of the hardest hit in the wake of the COVID-19 pandemic. As a result, one of the biggest cruise ship lines — Carnival Corp — took a tremendous fall on the stock market.

Carnival fell from over $50 a share in January of 2020 to under $8.50 by the start of April of the same year. But, with more and more being vaccinated across the United States and abroad, is it possible that Carnival Corp (and, by extension, Carnival stock) could eventually recover? Here are the facts.

Why Did Carnival Stock Fall?

It would seem that Carnival Cruise Line stock fell as a result of COVID-19, but the truth is that Carnival stock was falling for years before the onset of the novel coronavirus. Carnival stock peaked back in January of 2018 when it hit a price of over $71 a share.

For the next two years, the popular cruise line continued to see its stock price drop slowly and steadily. This has everything to do with the cruise line being involved in several different lawsuits.

For starters, CCL has been on a probation of sorts since 2017 after being found guilty of illegally dumping oil into the ocean. The company was fined $40 million, only to be found guilty of violating their probation in 2019 when they did the exact same thing again.

That’s not it, either: the lawsuit cited over 800 instances of illegal oil dumping between April 2017 and April 2018. Beyond this, Carnival also saw its price per share fall due to rising oil costs and higher expenses that resulted in various company-wide cuts.

Then, of course, there’s the elephant in the room that is COVID-19. This was sort of like the cherry on top for Carnival Cruise Line, and CCL share price still hasn’t come anywhere close to that $71 price point it hit a few years ago.

Are Cruise Lines Open Now?

According to the cruise line’s latest update, all Carnival cruises continue to be suspended through the end of June, 2021.

Considering the kind of bad publicity cruise lines received at the start of the COVID-19 pandemic when hundreds upon hundreds contracted the virus while on ships, this is a move that will continue to impact Carnival’s earnings but potentially benefit the cruise line in the long haul.

After all, opening up cruise lines only to close them again would be even more detrimental than just staying closed until it’s safe enough to reopen.

Not to mention, even though America, Canada, and the UK continue to roll out their vaccines, there are countless other countries who aren’t as fortunate and continue to see their coronavirus cases rise. Cruise ships set these countries as their destinations, and that would only mean sending a ship full of people to COVID-19 hotspots.

As of May 2021, Carnival hopes to have a handful of ships set sail from the US at the end of July. If there’s any sort of uptick in cases here in America, it can be expected that Carnival would push this July date even further. (For instance, Carnival cruises in Australia are on pause until at least September.)

Are Cruise Lines Requiring Covid Vaccines?

The Centers for Disease Control and Prevention recently ruled that cruise lines will not have to require vaccines in order to book a trip on a cruise ship, but that doesn’t exactly mean that cruise ships won’t be requiring their guests to be vaccinated when they open back up.

However, the CDC did say that if you aren’t vaccinated, you would need a negative COVID test in order to board. The reaction to this ruling has been mixed, with different cruise lines setting different guidelines for their future guests to follow upon reopening.

In Carnival’s case, both guests and crew will need to be vaccinated in order to board one of their July cruises. Whether or not this will apply to future Carnival cruises remains to be seen.

Carnival Earnings Snapshot

Looking at a snapshot of Carnival’s earnings over the past couple of years is incredibly bleak. In the summer of 2019, the cruise line was making more money than ever before: about $6.5 billion for the quarter.

From that point on, earnings dropped steadily and drastically with each new quarter — about $4.8 billion for both the fall of 2019 and the winter of 2020, then down to about $750 million for the spring of 2020, followed by $31 million for the summer and the fall of 2020, and now down to $26 million as of its latest earnings in the winter of 2021.

Will Carnival Revenues Go Up?

With cruises not even setting sail until July or later, it practically goes without saying that it’s going to take some time for Carnival’s revenues to go up but analysts forecasts are showing signs of optimism.

More than a year without any sort of dependable business could potentially devastate the cruise line (if it hasn’t already), and with the big question mark that looms over their projected return date, there’s no telling if or when Carnival revenues will go up for a sustained period.

Whatever the answer may be, it all depends on how soon Carnival cruises set sail. Even then, it might take years for those revenues to go up to what they were pre-pandemic.

Will Carnival Stock Recover?

So, with all these things considered, is it possible for Carnival stock to recover? And if so, when?

It seems fair to say that once cruises begin again and the public builds up trust once more, it’s not unlikely that Carnival stock will eventually recover.

With that being said, it’s probably going to take a few years to get to this point. You can already see Carnival stock rising steadily as of late, with the price per share rising from about $8.50 last year to over $27 today.

All it will take for a full recovery is for positive word of mouth and good PR to reshape the way the public perceives Carnival Cruise Line. In other words, only time will tell for sure.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.