Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Carnival Popped 14.5% Thursday

By Travis Hoium – Apr 9, 2020 at 12:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The recovery of cruise stocks continued today.

What happened 

Shares of Carnival (CCL -7.16%) continued their rally on Thursday, with shares up as much as 14.5% in early trading. At 10:50 a.m. EDT today, shares were up 10.4%, and are up 57.8% so far this week. 

So what 

Carnival has officially closed on the largest tranche of funds it raised this week. Management said that its $4 billion of 11.5% first-priority senior secured notes due 2023 have closed, and underwriters exercised their option to buy $62.5 million of additional convertible notes, which were originally sold earlier this week. 

Cruise ship docked off a sandy beach.

Image source: Getty Images.

In total, Carnival raised $6.6 billion this week, including selling 72 million shares of stock. The funds should give the company enough cash to survive the year, by which time it hopes that customers will return to cruises. Management has certainly done all it can to shore up the company's balance sheet; now it's waiting for the COVID-19 pandemic to pass. 

Now what 

Shares of Carnival have had a quick recovery this week, but there are still a lot of unanswered questions. The company isn't anywhere close to returning to normal operations, and even when the business opens again, it's not clear if customers will want to be in the type of a confined spaces where multiple COVID-19 outbreaks have been recorded. 

We may see a recovery in cruise stocks as consumer discretionary spending improves in the coming years, but don't be surprised if the route to recovery takes a long time and shares are volatile until COVID-19 is in the past. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Carnival Corporation Stock Quote
Carnival Corporation
CCL
$8.95 (-7.16%) $0.69

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.