Unable to reach customers around the world with its cruises, Carnival Corp hopes to sell some shares.
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 the cancellation of departures from the United States until the end of April, at the same time as it canceled trips departing from Australia and Europe. The company recently announced the planned resumption of Italian departures.
Although the coronavirus pandemic has closed cruise lines, investors have viewed its actions as a way to play a possible recovery. After falling sharply in early 2020 for fears of a prolonged closure, shares have recovered: while Carnival shares have fallen 37.7% in the last year, shares 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 recent quarter, but CFO David Bernstein said when these results were released that the company had “the liquidity in place to keep us going through 2021, until and all in an environment of zero income ”.
Carnival has relied primarily on the debt supply to overcome the pandemic, including a $ 3.5 billion debt offer earlier this month. The company’s credit rating was put into “degradation review” status at Moody’s Investors Service earlier this month and has already been deeply classified as “junk”.
Last month, Truist Securities analyst Patrick Scholes wrote in a note that U.S. cruises could remain berthed in 2022, although cruises 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 trading outside of Monday hours after the announcement.