For the past two weeks, Carnival share price has been treading in the tight range of $21.66 to $23.38. Yet since the company’s last earnings report, published one month ago, the Carnival share price is in the red.
Disappointing Earnings Report
Carnival (CCL) reported a loss per share of $1.80 in the second quarter of 2021. Revenues summed up to $50 million which was lower than the estimated level of $129 million. However, the company expects an improvement in its earnings by the end of the year.
Its shares rose by 4.30% on 20TH July when the company announced its plans to resume guest cruises. The cruise operator plans to resume operation with 75% of its total fleet capacity by year’s end.
However, with the surging cases of the Delta coronavirus variant, cruise ship stocks have declined. Some Royal Caribbean’s passengers tested positive for Covid-19 sending shares of major cruise lines down by more than 4%.
Investors are worried that with the robust spread of the virus, the government is likely to impose strict lockdown restrictions. This would hamper most travel operations leading to losses in the travel sector.
The slide in the share prices provides a risk but also an opportunity for investors. Carnival Cruise passengers are now required to be vaccinated, allowing the firm to operate and boost its earnings. But at the same time it shuts out about 14% of the market. According to Cruise Lines International Association (CLIA)’s global passenger report, about 14% of passengers are younger than 19 years. The younger passengers are unlikely to be vaccinated, yet older passengers will be. In the short run, Carnival Cruise stock price will be wobbly, but in the longer run, barring that we do not see a new Covid variant, the outlook is looking brighter.
Source: CLIA.
Carnival’s Technical Outlook
Carnival share price has been range-bound for the past week amid the surge in the coronavirus cases tied to the highly contagious Delta variant. The company’s shares have been trading within a tight range of $21.66 and $23.38 for a week.
At the time of writing, it slipped 4.67% to $21.65 in its previous trading session. On the two-hour chart, the price was trading slightly below the 25 and 50-period exponential moving averages signalling a downtrend in its prices.
Carnival’s share price broke out of an ascending triangle to the downside. I expect it to continue with its downtrend. If this happens, the bears would be targeting the $21.02 level. For the bulls to regain control the price would need to trade above the $23.38 high.
Carnival Share Price Chart
