You can almost hear the waves crashing against the ship as you taste some of the midnight buffet samplings on your plate and watch your friend fumble in an attempt to woo a fellow passenger. A cruise vacation is a feast for the senses, but for more than a year it's been off the menu for travelers. Now, the industry's painful hold could be over in as little as two months.

Carnival (NYSE:CCL) (NYSE:CUK) operates the world's largest fleet of cruise ships. It has returned to highly limited watery escapes in select international markets, but it's not going to return to profitability until a full return to stateside sailings. The U.S. Centers for Disease Control and Prevention has relaxed its guidelines for a return to sailing, but shares of all three cruise lines have not moved higher on the news of a potential mid-July restart. Investors aren't necessarily skeptical of the recovery. The problem here is that the shares have already discounted a return to pre-pandemic levels. With risks still high and the stock already bumping its head against the enterprise value ceiling, it's going to be a challenge for Carnival to be a millionaire maker for investors. 

Concept art of the roller coaster on Carnival's upcoming Mardi Gras ship.

Image source: Carnival.

The downside of upside 

Carnival stock is trading for barely more than half of where it was at the beginning of last year before the COVID-19 crisis was a global pressure point. Novice investors immediately view this as an opportunity, believing that the stock could nearly double from here to be valued the same as it was at the start of 2020. It's a costly and false assumption.

Carnival has raised $23.6 billion in stock and debt since the pandemic began. The good news is that this should be more than enough to hold Carnival over until it resumes full operations. The bad news is that this is a lot of money. We're talking about a ton of debt at high interest rates given the risks that creditors are taking. We're also talking about printing new shares when the stock was at much lower price points last year, increasing its enterprise value by even more than the $23.6 billion it has raised based on where the stock is now. 

When Carnival's enterprise value broke above $50 billion in March it hit levels last seen in the springtime of 2019. The shares have been meandering lately, but with a current enterprise value of $50.9 billion the market is pricing Carnival the same way it did a couple of years ago when its entire fleet was running at nearly full capacity in a buoyant economy without any major travel restrictions. Has Carnival earned a return to those rosy days? What's the upside from here even if that is the case?

Carnival's monthly cash burn dropped from an average of $530 million late last year to $500 million through the first three months of this year. It sees that bumping up to roughly $600 million through the current quarter as it readies some of its vessels for a return to revenue-generating voyages in the coming months. With port restrictions, capacity constraints, and customer uncertainty on how the cruising experience will play out in the new normal there are more red flags than sailing flags waving right now. 

The good news is that Carnival has the girth to survive. It is larger than its two nearest rivals combined. It will benefit from the inevitable shakeout of smaller players, potentially picking a line or two for pennies on the dollar in bankruptcy. However, the industry prognosis will likely be far more grim if we get to that point, and cruise line stocks would be at the bottom of the pecking order among travel and tourism stocks in that scenario.

Carnival can be a millionaire-maker stock if you firmly believe that the world's top cruise line will be much larger than it was in its pre-pandemic prime. However, keep in mind that it will have to be a lot better than it was before for the stock to appreciate because it's already being valued near its all-time highs. These waves can get pretty rough.

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.