Carnival Stock Looks Scary as Analyst Hits the Panic Button

NYSE: CCL | Carnival Corporation  News, Ratings, and Charts

CCL – Carnival Cruises (CCL) faces several existential challenges due to its financial structure and a looming recession. Read on to find out why Carnival shareholders should prepare to navigate choppy water…

  • Carnival (CCL) could benefit as the Centers for Disease Control and Prevention (CDC) terminates its Covid-19 Program for Cruise Ships.
  • On the other hand, Carnival’s planned $1 billion share sale suggests that the company may be having a cash crisis.
  • Investors can simply avoid CCL stock as a Stifel Nicolaus analyst warns of “panic” among investors.

Miami-headquartered cruise operator Carnival (NYSE:CCL) recently received some positive news as the Centers for Disease Control and Prevention (CDC) has ended its Covid-19 Program for Cruise Ships. Don’t get too excited yet, though. CCL stock could still head lower as Carnival’s planning a massive share sale. Plus, an analyst is suggesting that the company’s share sale could precipitate “panic” among Carnival’s investors.

Carnival is a leader among U.S. cruise line operators. If you’re going to wager on a recovery in travel and leisure, owning Carnival shares makes sense – or so it seems.

Yet, investing in Carnival can be a risky business. Granted, a U.S. regulator just eased up on its monitoring of cruise ships, and that’s a positive sign. There’s also a worrisome development afoot, though, as Carnival takes what might be considered a drastic measure to raise much-needed capital.

CCL Carnival Corporation $8.5

What’s Happening with CCL Stock?

Believe it or not, CCL stock is threatening to revisit its Covid-19 crisis low of around $8.50 from March 2020. That’s a painful reality for Carnival’s investors to face, as the shares were worth $26 as recently as September of 2021.

Does this mean that Carnival shares are a screaming bargain right now? Not necessarily. Bear in mind that Carnival has no price-to-earnings ratio (P/E) ratio because it’s not a profitable business. On a trailing 12-month basis, Carnival’s earnings per share (EPS) is -$8.31. That’s discouraging, considering the share price was $9 and change recently.

This isn’t to suggest that all of the news surrounding Carnival is hopeless. As I reported not long ago, the CDC is terminating its Covid-19 Program for Cruise Ships. This means that the CDC will cease reporting Covid-19 risk levels for U.S. cruise ships. It suggests that the CDC is, to a certain extent, trusting that America’s cruise lines can effectively monitor themselves.

Let’s Call It Panic

The CDC’s easing of cruise-ship monitoring may inspire confidence in some CCL stock investors. However, there’s another development that could be a cause for concern among Carnival’s shareholders.

In a press release, Carnival revealed that it has priced an underwritten public offering of 102,139,621 common stock shares. On top of that, Carnival “granted the underwriter a 30-day option to purchase up to 15,320,943 additional shares of common stock of the Company.”

It’s no secret that Carnival has a sizable debt load. The company even admitted in the press release that the net proceeds from the offering “could include addressing 2023 debt maturities.”

The primary concern here is the prospect of share dilution. In fact, Stifel analyst Steven Wieczynski calculated that the offering will dilute Carnival’s shareholders by roughly 8.5%.

Additionally, Wieczynski suggested that the offering could have ripple effects on Wall Street. “This equity raise will cause concern (actually let’s call it panic) across the investment community for sure,” the Stifel analyst cautioned.

What You Can Do Now

A shift to self-monitoring is a good sign for America’s cruise shop operators – no doubt about that. Still, Carnival’s planned share sale should remind investors that the company is in dire need of capital.

Even beyond the share dilution concerns, prospective investors should consider the possibility of panic selling that Wieczynski seems to be hinting at. Hence, CCL stock could head lower and traders would be wise to stay on the sidelines for now.

The stock market can be unpredictable, volatile, and sometimes totally nonsensical. InvestorPlace.com strives to cut through the noise and bring you information on what matters – and how it impacts your portfolio. We deliver thoughtful coverage on everything from stocks to cryptos to pre-IPO investments. So whether you live and breathe breaking stock news or expect your stocks to pay you, InvestorPlace.com has your back.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. 


CCL shares fell $8.85 (-100.00%) in premarket trading Thursday. Year-to-date, CCL has declined -56.01%, versus a -14.94% rise in the benchmark S&P 500 index during the same period.


About the Author: David Moadel


David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CCLGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Recession or Not Recession…That Is the Question

Every investor appreciates that recessions and bear markets go hand in hand. But the definition of a recession often seems more difficult to pin down. So are we in a recession? And if not, then does that mean that disaster has been averted or that the pain train is still rolling towards investors? This is an important debate because it helps us appreciate what lies ahead for the stock market (SPY). We will tackle this vital topic in this week's commentary. Read on below...

:  |  News, Ratings, and Charts

3 Active Stocks on Wall Street to Buy Right Now

Even though the U.S. stocks ended July with decent gains, growing recession fears could keep the stock market under pressure in the near term. However, despite the current market headwinds, it could be wise to invest in fundamentally sound stocks, Microsoft (MSFT), SIGA Technologies (SIGA), and Fortinet (FTNT), which have been active on Wall Street lately. Read on to learn more…

:  |  News, Ratings, and Charts

4 Big Reasons Why the Bear Rally Is Nearing an End…

The Stock Market (SPY) has put on an impressive rally over the last few weeks, leading many investors to believe that the bull is ready to resume its run. However, there are multiple reasons to believe the bear market is far from over. I lay out 4 of the main reasons below and explain how you can profit from the volatile markets that lie ahead. Read on below for more…

:  |  News, Ratings, and Charts

2 Winning Stocks to Pay Attention to This Week

Concerns over soaring inflation, the Fed’s aggressive interest rate hikes, the decline in GDP for two consecutive quarters, and a potential recession are expected to keep the stock market under pressure in the near term. Fundamentally sound and winning stocks Murphy USA (MUSA) and JAKKS Pacific (JAKK) could be good additions to your watchlist as investors prepare for a busy week of inflation data. Let’s discuss…

:  |  News, Ratings, and Charts

4 Big Reasons Why the Bear Rally Is Nearing an End…

The Stock Market (SPY) has put on an impressive rally over the last few weeks, leading many investors to believe that the bull is ready to resume its run. However, there are multiple reasons to believe the bear market is far from over. I lay out 4 of the main reasons below and explain how you can profit from the volatile markets that lie ahead. Read on below for more…

Read More Stories

More Carnival Corporation (CCL) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CCL News