What happened

Shares of Carnival (NYSE:CCL)(NYSE:CUK) fell 57% last year, according to data provided by S&P Global Market Intelligence, as the coronavirus took a heavy toll on the cruise industry.

So what 

After a series of COVID-19 outbreaks occurred on multiple cruise ships, the Centers for Disease Control and Prevention (CDC) issued no-sail orders that forced Carnival and other cruise operators to cancel their U.S. voyages. With their ships stuck at port and little revenue coming in, the major cruise lines quickly began bleeding cash. 

The words cruise canceled are typed on a torn piece of paper, which is on top of two passports.

2020 was a difficult year for Carnival and other cruise ship companies. Image source: Getty Images.

By the second half of 2020, Carnival's cash burn rate had reached approximately $650 million per month. To stay afloat, Carnival was forced to raise billions in cash via stock sales and high-interest-rate debt, diluting shareholders and increasing its interest costs in the process.

Now what

With health officials in the U.S. and international markets beginning to rescind their no-sail orders, Carnival is slowly resuming operations. Promising vaccines developed by the likes of Moderna and Pfizer could accelerate this process, if they can help to reduce COVID-19 infection rates and bring about the end of the pandemic. Carnival's stock price, in turn, could rebound in 2021.

Still, risks remain. Higher interest expenses and safety-related costs will make it more difficult for Carnival to achieve its pre-pandemic profit margins. And with more shares outstanding after its stock offerings, investors may find is per-share profits less attractive.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.