Carnival Corp. can’t take customers around the world on its cruise ships and instead expect to sell some stock.
The cruise operator announced Monday afternoon that it will sell $ 1 billion in new stock as its ships remain docked due to the COVID-19 pandemic. Carnival CCL,
in January extended the cancellation of departures from the US until the end of April, while also canceling trips from Australia and Europe. The company recently announced the planned resumption of Italian departures.
While the coronavirus pandemic has closed cruise lines, investors have looked to their stocks as a way to make a possible recovery. After falling hard in early 2020 over fears of a protracted close, shares have been revived: while Carnival’s shares have fallen 37.7% in the past year, shares have fallen by more than 77% in the past six months and in the past nearly 50%. three months.
Carnival lost more than $ 2 billion in the most recently completed quarter, but Chief Financial Officer David Bernstein said when those results were released that the company “has the liquidity to support ourselves in 2021, even in a no-revenue environment.”
Carnival has mainly relied on offering debt to get through the pandemic, including a $ 3.5 billion debt offer earlier this month. The company’s credit rating was set to “rating for downgrade” with Moody’s Investors Service earlier this month, and is already rated deep in “junk” status.
Last month, Truist Securities analyst Patrick Scholes wrote in a note that US cruise ships could remain 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’s shares fell about 2.5% in after-hours trading Monday after the announcement.