Unable to take clients from around the world on its cruises, Carnival Corp. hopes to sell some shares instead.
The cruise operator announced Monday afternoon that it will sell $ 1 billion in new shares as its ships remain docked due to the COVID-19 pandemic. Carnival CCL,
in January it extended its cancellation of departures from the US until the end of April, while also canceling the trips departing from Australia and Europe. The company recently announced the planned resumption of Italian departures.
While the coronavirus pandemic has shut down cruise lines, investors have viewed their actions as a way to play an eventual recovery. After falling sharply in early 2020 on fears of a prolonged shutdown, stocks have rebounded: while Carnival stocks have declined 37.7% in the last year, stocks have gained more than 77% in the last six months and almost 50% in the past. three months.
Carnival lost more than $ 2 billion in its most recently ended quarter, but CFO David Bernstein said when those results were released that the company has “the liquidity to keep us going through 2021, even in an environment of zero income. “
Carnival has relied primarily on debt offers to overcome the pandemic, including a $ 3.5 billion debt offer earlier this month. The company’s credit rating was placed on “review for downgrade” status by Moody’s Investors Service earlier this month, and it is already rated “junk” status.
Last month, Truist Securities analyst Patrick Scholes wrote in a note that US cruise ships could remain docked until 2022, although cruise ships are more likely to resume later this year.
“We now see July as the best case to restart,” although the fourth quarter is more likely, he wrote.
Carnival shares fell about 2.5% in after-hours trading Monday after the announcement.