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Unable to take customers from around the world on its cruise ships, Carnival Corp. expects to sell shares instead.
The cruise operator announced Monday afternoon that it would sell $ 1 billion in fresh stock while its ships remain docked due to the COVID-19 pandemic. CCL Carnival,
in January, extended its cancellation of departures from the United States until the end of April, while also canceling trips from Australia and Europe. The company recently announced the planned resumption of Italian departures.
As the coronavirus pandemic has shut down cruise lines, investors have turned to their stocks as a way to play for a possible recovery. After falling hard in early 2020 on fears of a prolonged shutdown, stocks have been revived: While Carnival’s stock has fallen 37.7% in the past year, stocks have gained more than 77%. % in the past six months, and nearly 50% in the past three months.
Carnival lost more than $ 2 billion in its most recent quarter, but CFO David Bernstein said when these results were released the company had “the cash in place to support itself through 2021, even in an environment without income ”.
Carnival has mainly relied on debt offers to weather the pandemic, including a $ 3.5 billion debt offer earlier this month. The company’s credit rating was put on “downgrade review” by Moody’s Investors Service earlier this month, and is already rated deeply in “junk” status.
Last month, Truist Securities analyst Patrick Scholes wrote in a note that U.S. cruise ships could stay docked until 2022, although cruises are more likely to resume later this year.
“We now see July as the best case for a reboot,” although the fourth quarter is more likely, he wrote.
Carnival shares fell about 2.5% after-hours trading Monday after the announcement.
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