What happened
A funny thing happened after Carnival (CCL -1.42%) (CUK -1.69%) reported earnings this morning -- and I mean funny strange, not actually funny.
With the cruise company heading into its still-pandemic-plagued fiscal fourth quarter 2021, analysts had forecast that it would lose $1.28 per share despite taking in $1.34 billion in revenue -- but it seems Carnival managed to miss on both the top and bottom lines. Revenue for the quarter was only $1.29 billion, and the company reported a generally accepted accounting principles loss of $2.31 per share.
Now you might expect that news to torpedo the stock, sending it to a watery grave. But instead, Carnival stock is up -- 2% as of 1:05 p.m. ET.
Image source: Getty Images.
So what
What did Carnival investors find to like in a report like this one? That's an excellent question.
The good news is that, with many of the company's ships now back in service, albeit at occupancy of just 58%, revenue surged about 38 times over what it was in Q4 2020 -- when no ships were in service. The company's per-share losses, meanwhile, although staggering, were $0.10 less than they were a year ago. And Carnival noted that cash from operations turned positive in the month of November.
Fleetwide operating capacity is now back to 61%, and the company's whole fleet is expected to be "back in operation by the spring of 2022." Meanwhile, the company says that, although the pandemic is still lingering, it has $9.4 billion in liquidity left, with which to coast through the pandemic's tail end.
Now what
Still, the good news was pretty vastly outweighed by the bad: In total, Carnival racked up $2.6 billion in losses in its fiscal fourth quarter. And Carnival is burning through $510 million a month on average in Q4.
That was actually a better cash burn number than Carnival had expected, but even so, it's a very big and a very negative number. Despite being cash flow positive, once you subtract the cost of capital spending, it's clear that Carnival is still burning boatloads of cash. At its present rate of cash consumption, even the company's $9.4 billion in liquidity will only be enough to keep Carnival afloat another 18 months.
And now here comes omicron threatening to capsize the whole operation once again, with 45 U.S. states reporting cases, half the countries around the globe reporting the same thing -- and Carnival rival Royal Caribbean pulling into port yesterday to unload 48 passengers and crew testing positive for COVID-19.
All I can say about today's stock price pop is: Enjoy it while it lasts -- because it probably won't.
