Extreme volatility in shares of listed cruise shipping companies continued on Wednesday as a broker’s critical assessment of the outlook for Carnival Corporation & plc sent valuations of all the three majors sharply lower.
Morgan Stanley slashed full-year EBITDA estimates for Carnival from nearly a $1 billion profit to a $900 million loss, “due to weaker than expected occupancies, weakening pricing, elevated unit costs and higher fuel costs,” Forbes.com reports on its website.
The broker warned that in a worst-case scenario, Carnival’s stock could lose all of its value if the economy falls into a recession and the company faces another demand shock, the report said.
“The Covid-19 pandemic, surging inflation and higher fuel prices are all having a material impact” on Carnival’s business, management said on the earnings call last week,” the report continued, adding that the management now expects a net loss for the full financial year 2022 that will end on 30 November.
In its first quarter interim report Carnival had already said it expects a net loss for the full year but a profit for the third quarter. However, it revised the third quarter guidance to a loss in the second quarter interim report last week.
At around 1 PM New York time, shares in Carnival Corporation, the US listed and Panama domiciled holding company of the group, traded 14.98% lower at $8.78 after hitting a low of $8.66 earlier in the session.
Royal Caribbean Group fell 11.42% to $35.56, the session’s low, while Norwegian Cruise Line Holdings Ltd (NCLH) fell 10.35% to $11.41. It had hit a session’s low of $11.30 earlier.
Carnival’s second quarter earnings triggered double digit gains for all the three listed companies when it was published on Friday.
The report stated that cash flow had turned positive and President and CEO Arnold Donald stated: "It is reinforcing to see continued strength in demand with our guests overcoming far more restrictive protocols than broader society and travel at large, leading to a near doubling of booking volumes since last quarter with near-term bookings even outpacing 2019. We were encouraged by close-in demand and remain focused on optimizing occupancy while preserving long term pricing."
