The Stock Of Carnival Falls Further Even As the Company’s Results Beat Expectations With Revenue Doubling

Despite reporting better-than-expected fiscal second-quarter results and providing an optimistic outlook, shares of Carnival Corp. experienced a continued decline on Monday.

‍

The cruise operator narrowed its net losses for the quarter ending on May 31 by 78%, with losses amounting to $407 million or 32 cents per share, compared to $1.83 billion or $1.61 per share in the same period last year. Adjusted per-share losses, excluding nonrecurring items, narrowed by 81% to 31 cents, surpassing the FactSet loss consensus of 34 cents.

‍

Carnival's revenue surged by 104.5% to a second-quarter record of $4.91 billion, exceeding the FactSet consensus of $4.79 billion. Passenger-ticket revenue saw a remarkable increase of 144.4% to $3.14 billion due to higher pricing, while onboard and other revenue rose by 58.6% to $1.77 billion.

‍

However, despite the positive results, Carnival's stock slumped by 8.1% in morning trading, emerging as the top decliner among the S&P 500. Since reaching a 13-month high of $16.12 on June 15, the stock has declined by 9.9%. Before the sell-off, the stock had gained 40.7% month-to-date, indicating the potential for its best monthly performance since February 2021 when it soared 43.3%. As of June, the stock has recorded a 29.3% increase, marking its largest one-month gain since rallying 34.2% in January 2023.

‍

The weakness in Carnival's stock also affected its competitors, as shares of Norwegian Cruise Line Holdings Ltd. dropped by 3.7% and Royal Caribbean Group's stock fell by 0.8%.

‍

Carnival witnessed an improvement in occupancy to 98% from 69%, an increase of 76% in the number of passengers carried (3 million), and a 91% rise in passenger cruise days (21.8 million).

‍

Josh Weinstein, Chief Executive Officer of Carnival, expressed enthusiasm about the company's performance, stating that their momentous wave period, which typically occurs in the first quarter, had exceptional results in the fourth quarter and continued its acceleration into the second quarter. Weinstein noted the tremendous booking volumes, positive pricing trends, and improved commercial execution, all of which reflect their advertising investments' positive returns.

‍

Carnival has raised its outlook for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for fiscal 2023 to a range of $4.1 billion to $4.25 billion, up from the previous range of $3.9 billion to $4.1 billion. The company also revised its 2023 net per diems guidance, predicting a constant-currency increase of 5.5% to 6.5% above 2019 levels, compared to the previous guidance of up 2.5% to 3.5%.

‍

Despite the recent decline, Carnival's stock has still experienced a significant increase of 80.2% year-to-date, outperforming the S&P 500, which has gained 13.5%.

‍