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Why Carnival Stock Lost 14% in January

By Demitri Kalogeropoulos – Feb 7, 2020 at 9:17AM

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The cruise ship giant fell on fears of a slump in its Chinese region.

What happened

Carnival (CCL -6.82%) stock underperformed the market last month, losing 14% compared to a roughly flat result for the S&P 500, according to data provided by S&P Global Market Intelligence.

The slump added to a tough recent period for the cruise ship giant's investors. Shares gained only 3% in 2019 compared to a 29% rally in the broader market.

A cruise ship floating in a cove between two islands covered in greenery

Image source: Getty Images.

So what

Investors pressured the stock last month on worries that the coronavirus outbreak would harm its short-term growth opportunities. Rival Royal Caribbean added to the volatility by announcing that it was suspending trips from its China-ported ship through most of February.

Now what

Carnival gets a relatively small portion of its global business from the Chinese market, but the close quarters of its cruise vacations put it at risk of being directly impacted by flu outbreaks, or by consumer fears of contracting the illness. Thus, investors will have to wait and see how the situation unfolds over the next few weeks before getting a good idea of the potential impact on the business. Both Carnival and Royal Caribbean have pledged to update shareholders on industry trends as soon as conditions stabilize to the point where dependable financial projections are possible.

Demitrios Kalogeropoulos owns shares of Carnival. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

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