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Carnival shares fall on ballooning costs, dragging down cruise shares

The brand new Carnival Cruise Line ship Mardi Gras docked at Port Canaveral, Florida on July 30, 2021.

Joe Burbank | Orlando Sentinel | Tribune News Service | Getty Images

Shares in Carnival fell amid the pandemic on Friday after the cruise line posted third-quarter earnings that revealed higher costs associated with inflation, supply chain disruptions and maintaining health and safety protocols.

Shares in Carnival fell about 20% in late morning trading. The stock fell to a 52-week low of $7.01[ads1] earlier in the session, during the stock’s April 2020 pandemic fall, when shares traded around $7.80 intraday.

If Friday’s loss holds, it will knock nearly $3 billion off Carnival’s market value. The shares of Norwegian and Royal Caribbean also fell on Friday, down 14% and 11% respectively.

Carnival reported an adjusted net loss of $770 million, or 65 cents per share, on $4.3 billion in revenue. Operating costs and expenses totaled $3.4 billion in the quarter, compared to costs of $1.6 billion in the third quarter of 2021.

Carnival said bookings rose 15 percentage points from the previous quarter to 84%. That compared to 54% occupancy in the same period in 2021. Despite authorities easing pandemic-era protocols in both the U.S. and, more recently, Canada, the company is projecting fourth-quarter orders below 2019 levels — at lower prices.

Cruise lines across the board are struggling with massive debt taken on during Covid shutdowns, made more expensive by rising interest rates. Carnival on Friday morning reported $1 billion in principal payments so far for 2022 and a total of $9 billion due by 2025.

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