Carnival shares fall 20% to 30-year low after losses were worse than expected

Shares of Carnival Corp., one of the world's biggest cruise lines, fell to a three-year low on Friday after the company reported worse-than-expected earnings - disappointing investors even as its cash flow turned positive for the first time since sailings resumed. operations during a pandemic.

Carnival shares fell more than 20% to $7.02 at 10:10 a.m. EDT Friday — hitting their lowest level since 1992 — after the company reported a third-quarter net loss of $770 million on revenue of $4.3 billion – much less than analysts' $4.9 billion. they expected.

The shortfall came even as the company reported that its cash flow (as measured by Ebitda) turned positive for the first time since cruise lines resumed operations -- coming in at about $300 million, but still less than half of expectations calling for $730 million.

Image source

CEO Josh Weinstein said in a statement that the company has seen "meaningful improvement" in booking volumes, which are "now well above strong 2019 levels" since it announced relaxed protocols last month, but the company expects cash flow to stagnate or may even have fallen slightly in the fourth quarter, significantly worse than the expected $600 million.

Shares of the cruise line, which took on debt to stay afloat during the pandemic, have plunged 66% this year, nearly triple the S&P 500's 24% drop.

Rival cruise stocks also took a hit after the release: Royal Caribbean fell 10% to less than $40 (down 51% this year), while Norwegian Cruise Line fell 13% (now down 46% this year).

KEY BACKGROUND

---

The cruise industry was among the first to be hit by the coronavirus pandemic and has been reeling ever since. The Centers for Disease Control and Prevention issued a no-fly order for industry in March 2020 that lasted until July. Shares of Carnival recovered after the company posted strong earnings this summer, but the rally was short-lived as analysts began to cut their price targets in light of rising inflation and higher fuel prices. Among the most bearish, Morgan Stanley warned that in a worst-case scenario, Carnival's stock could fall to $0 a share if the economy slips into recession and that's why company faced another "demand shock" [ shortage shock ]same as Covid-19 pandemic.

TANGENT

---

Carnival raised nearly $1.2 billion in a stock offering last quarter, in part to help pay down its massive debt of more than $34 billion.

Thank you so much for reading share your thoughts in the comment section : )

Warm regards,
@Winy

35 % set to Ph-fund