Down 67%, Is Carnival Stock Finally a Buy?
At $7 per share, Carnival (NYSE: CCL) (NYSE: CUK) has fallen by an eye-watering 67% since the start of 2022. And that underperformance might be surprising to those who expected the cruise company to post a sustained rebound after the COVID-19 pandemic. Unfortunately, the pandemic left the company with some heavy baggage. And third-quarter earnings demonstrate the severity of the problem.
Starting in 2020, cruise ships were the site of massive COVID-19 outbreaks. This prompted health agencies like the Centers for Disease Control and Prevention to impose no-sail orders on the industry in March of that year. With its cruise ships parked and annual revenue falling to as low as $1.9 billion in 2021 (from $20.8 billion in 2019), Carnival sold 19 ships, tapped debt markets, and turned to equity dilution to raise the capital it needed to survive the crisis.
In 2020 and 2021, Carnival generated a combined net loss of $19.7 billion, saw its long-term debt balloon from $9.7 billion to $28.5 billion, and had its shares outstanding increase from 690 million to 1.12 billion (a jump of 62%). Now, the company will struggle to manage this baggage, even as operations normalize.
Source Fool.com
