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What happened
Carnival (NYSE: CCL) (NYSE: CUK) shareholders beat a booming market in November as their shares rose 46% from the 11% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.
The rally hasn’t resulted in many larger losses, however, and the cruise ship giant remains more than 50% lower so far in 2020.
Image source: Getty Images.
So what
The November rally reflects growing optimism that a COVID-19 vaccine will soon be widely available, which would allow Carnival and its peers to resume normal operations perhaps as early as mid-2021. News that several effective vaccine candidates are now in production has boosted Carnival shares along with Royal Caribbean Cruises and Norwegian Cruise Line Holdings last month, and the big rally continued in early December.
Now what
There is still an almost complete global break on sailings, and so there remains an open question when Carnival can resume loading guests onto its ships. In the meantime, the cruise boss must finance his substantial fixed costs through debt, including the additional $ 1.5 billion he took last month.
These tough conditions warrant a lot of caution for investors hoping to buy a rebound story for this company, which could fight the lingering pressures of COVID-19 for years to come, even if the economy avoids slipping into a recession in 2021.
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