Carnival lands a record $4.4B loss — but investors are eyeing 2021 bookings

Friday, June 19, 2020 by Robinhood Snacks | Disclosures
_Waiting for the "no sail" order to expire_

Waiting for the "no sail" order to expire

Fire up the nautical puns... After at least 3 ships faced on-board COVID-19 crises, a wave of cancellations, and a straight up ban on cruises, we weren't expecting much from Carnival. But the cruise operator managed to sink below even the worst expectations.

  • Biggest quarterly loss (ever): Carnival lost $4.4B — nearly 2X more than what Wall Street expected. In the same quarter last year, it turned a $430M profit.
  • Sales plunge: Sales took an 85% scuba dive, coming in at only $700M. Blame corona-related travel concerns, followed by a strict No Sail Order.
  • Cash burn: Carnival expects to burn $650M per month for the 2nd half of 2020. Its massive $700M+ cruise ships are just chilling on water, burning cash by the minute.

IDGAF'ing... Carnival investors. The stock actually jumped 5% after the Titanic-style earnings. Investors are focused on the rising tide:

  • August 1st: The day Carnival plans to sail again. That's only a week after the CDC's No Sail Order is expected to end. Carnival says the plan is "premature," but hasn't cancelled the 8 scheduled cruises.
  • 2021 bookings: As of May 31, advanced bookings for 2021 cruises were surprisingly near pre-COVID levels (though selling at lower prices).
  • Liquidity: Carnival's $7.6B in available cash will help it survive until it can sail. It's also planning to sell six ships over the next three months.

It's the cathartic earnings report... People were expecting terrible results from Carnival. That helped stabilize its stock when earnings tanked. Carnival shares are up 33% over the month as investors focus on economic reopenings. Carnival shareholders hope they just got over the worst hump. Meanwhile, some corona-conomy thrivers like Slack have dropped after earnings, because their numbers weren't as jaw-dropping as expected.