What’s Happening With Carnival Stock?

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CARNIVAL, the largest cruise line operator, has seen its stock price drop nearly 41% over the past month, which is well below the S&P 500, which was down about 10% over the same period. While headwinds related to the Covid-19 pandemic are easing for travel and leisure stocks as demand rises, there is another set of challenges on the horizon for cruise line players like Carnival. Oil prices are rising, with Brent crude currently trading at around $120 a barrel, up about 50% year-over-year. Fuel costs accounted for about 9% of Carnival’s operating expenses in 2019, when Brent crude was trading at $60 a barrel, and it is very likely that continued high oil prices could adversely affect Carnival’s profitability . There are also concerns about the US economy heading into recession as the Federal Reserve pursues aggressive rate hikes to contain rising inflation. On Wednesday, the central bank recently raised its benchmark rates by 0.75%, its highest increase since 1994. US consumer sentiment has also fallen to record levels as a rise in prices takes a toll on domestic finances and could affect companies like Carnival that rely on discretionary spending. An economic downturn could weigh down Carnival stock, one of the most indebted players in the cruising industry, with total debt of close to $33 billion.

However, now that the CCL stock has seen a fall of almost 40% over the past month, will it continue its downward trend in the near term, or is a recovery imminent? According to historical performance, there is Almost equal chance of rise or fall in CCL stock next month, out of 23 cases Over the past 10 years, CCL’s stock has seen a decline of 40% or more in twenty one days, 12 of them CCL stock is rising as a result one month later (twenty one trading days). This historical pattern represents 12 out of 23, or CCL stock likely to rise by 52% in the coming month, which means the stock may not be a particularly attractive buy for the near term. View our analysis Carnival Chance of a Rise for more information.

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Calculation of ‘Event Probability’ and ‘Chance of Rise’ using data of last ten years

  • After rising -25% or more in five days, the stock rose on a 47% chance over the next five days.
  • After rising -38% or more in ten days, the stock rose on 20% of the occasions over the next ten days.
  • After rising -41% or more over a twenty-one day period, the stock rose on 52% opportunities over the next twenty-one days.

The tough macro environment, Carnival’s high leverage, and low growth potential based on historical data indicate that Carnival stock may not be a very good bet for the near-term.

Stock prices across sectors have fallen sharply in recent months and we are now in a bear market for the first time since March 2020, when the COVID-19 outbreak triggered a market crash. We capture key trends in the Dow during and after major market crashes in our interactive dashboard analysis.market crash comparison,

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