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Vladimir Zernov
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Carnival

Carnival Corporation Video 07.04.21.

Bookings Increase At A Fast Pace

Shares of Carnival gained strong upside momentum after the company released its first-quarter business update. Carnival reported GAAP net loss of $2 billion which is not surprising given the current state of the cruise industry.

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However, Carnival noted that cash burn rate in the first quarter of 2021 was better than expected. The company added that booking volumes for all future cruises during the first quarter of 2021 were about 90% higher than booking volumes during the fourth quarter of 2020, which signals that demand for cruises is starting to increase at a fast pace

In fact, cumulative advanced bookings for full year 2022 were ahead of the year 2019, a sign that people are ready to get back to cruising once the situation normalizes.

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What’s Next For Carnival Corporation?

The current situation on the coronavirus front remains challenging, but the market sees light at the end of the tunnel. Bookings have started to increase at a healthy pace as customers look ready to get back to their normal lives which include vacations on cruise ships.

Carnival stated that six of the company’s nine brands were expected to resume limited cruise operations by summer. Carnival noted that it expected to capitalize on pent-up demand, and the company’s booking data supports this view.

The market is clearly bullish on Carnival as the stock is up by roughly 40% year-to-date and is currently testing all-time high levels. The strong demand for future cruises may ultimately lead to higher prices for cruises, which will provide additional support to Carnival’s balance sheet.

It should be noted that the stock is trading well below pre-pandemic levels, so the market has just started to price in the turnaround of the company’s business. Analysts expect that the company will get back to profitability in 2022 with a small profit of $0.14 per share, but the market will likely try to look beyond 2022 when evaluating the company’s stock.

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