It’s been a rough year for Carnival Corp (NYSE: CCL) depicted by the stock shedding more than 50% in market value. The pandemic bringing the cruise line business to a halt has all but taken a significant toll on revenue streams conversely affecting the stock’s market sentiments.
Cruise Line Recovery
Fast forward, things are showing signs of improvements with the easing of the coronavirus fears, amid the coronavirus vaccine distribution. Likewise, business is slowly coming back to life with the cruise line company announcing its Seabourn ultra-luxury brand will conduct voyages between Vancouver, Canada, and Juneau, Alaska, come next year.
The announcement comes on the heels of the Food and Drug Administration authorizing two new coronavirus vaccines. Widespread vaccinations are the catalyst needed to bolster cruise line business come 2021. The vaccines are expected to give people a reason to make bookings.
Cranival Bounce Back
Carnival has already announced plans to dispose of 18 of its more inefficient ships in preparation for the cruise line business bouncing back to normalcy next year. The sell-off will cost the company 12% of its revenue but just 3% of the profit.
In addition, Carnival has confirmed that three of its ships with nixed cruises are headed for dry dock maintenance and refurbishment. The refurbishment is part of a broader plan to strengthen the competitive edge once the cruise line business bounces back.
The cruise line company has also taken delivery of a new innovative cruise ship. The Mardi Gras is a liquefied natural gas-powered ship that will affirm the cruise line decarbonization program. The ship will make its much-awaited debut in April of next year. Once it begins operations, it will be the most innovative ship, boasting a suite of innovative technology.
While the stock is still down by more than 50% for the year, the upward momentum has started gathering pace. Investors' sentiments around cruise line stocks have improved significantly as investors remain confident of the kind of impact the Coronavirus vaccine will have on the overall industry. Likewise, Carnival appears to be trading at a discount relative to its long term prospects and improving macro environment.