Carnival (NYSE:CCL)(NYSE:CUK) took delivery of its newest vessel, Mardi Gras, last month, and it won't be just another cruise ship. Mardi Gras will be the first in Carnival's fleet powered by liquefied natural gas, a more environmentally friendly and right now cheaper energy source than heavy fuel oil or marine gas oil. 

It's not just the fuel source that will make Mardi Gras different when it takes on its first passengers in April or later this year. Beyond a suite of new tech it will also be the first cruise ship with an actual roller coaster. Carnival's new ship is going to turn heads, but investors are used to roller coasters. Carnival was a wild white-knuckled ride in 2020. 

The stock began last year perched above $50, collapsing below $8 in March when the pandemic shut down its operations. It clawed its way back just above $20 by the end of 2020, but what will 2021 bring to investors in the world's largest cruise line operator? Let's see if Carnival can be a millionaire maker stock.

A couple rides a roller coaster on a Carnival cruise ship.

Image source: Carnival.

Buckle up

There's no denying that 2020 was a challenging year for the cruise line industry. Unlike other travel providers and transportation stocks that have been gradually ramping back up their operations, we're seeing Carnival and smaller rivals Royal Caribbean (NYSE:RCL) and Norwegian Cruise Line Holdings (NYSE:NCLH) continue to push out their restart dates. There's a growing expectation that the industry will begin sailing again as the COVID-19 vaccination process plays out this year, but with cases continuing to spike worldwide there is little visibility as to when things will get back to normal.

Carnival and its peers did what they had to do to survive in 2020 and beyond. They raised billions apiece through stock offerings at low price points and debt at high interest rates. You can't blame them for panhandling in the middle of a storm. Even after trimming its operations and unloading some of its ships, Carnival is still burning through $530 million a month.

It had to pay a price to stay afloat, and it's one that investors can't ignore. Carnival's enterprise value was $41.7 billion at the end of its 2019 fiscal year that ends in November. Carnival stock would go on to lose more than half of its value, but its enterprise value at the end of the 2020 calendar year was actually higher at $42.1 billion. Put another way, the market thinks that Carnival is worth as much as it was 13 months ago -- before the pandemic -- even if the shares folks are holding are worth less than half

Carnival's business will recover. Cruising is too compelling a travel experience to just sail away from tourist fancy. However, it will be harder for the stock to justify upticks when it has already made all of that back following debt offerings that will weigh down eventual earnings and stock offerings that will eat into the per-share profitability.   

Investors can't just look at a stock chart and assume that Carnival is cheaper now just because the stock price is lower. Carnival's fully diluted share count has risen from 688 million to 775 million through the first nine months of fiscal 2020. Long-term debt has ballooned, nearly doubling from $9.7 billion to $18.9 billion in that time. 

If you're bullish on Carnival's long-term prospects, I'm with you. Don't bet against the top dog in an industry that will grow again. You're just going to have have to be really patient. Wait for the shakeout of weaker players. My concern is for the bulls who are adamant about Carnival stock returning to its highs in the next year or two. Have they done the math? Have they looked at the per-share projections? Carnival is not a millionaire maker stock in the near term, and only investors with a long-term mindset should be boarding right now. 

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.