What happened

Shares of Carnival Corporation (CCL 0.98%) jumped another 8.1% in Tuesday trading, followed by Norwegian Cruise Line Holdings (NCLH 0.76%), up 5.8%, and Royal Caribbean (RCL 0.98%), up 5%, as cruise stock investors continued to react to Carnival Corporation's fourth-quarter earnings report yesterday.

The weird thing is, though, that earnings report wasn't particularly good yesterday, and it didn't somehow change for the better today.

Three cruise liner ships lined up abreast in port.

Image source: Getty Images.

So what

As the saying goes, "facts are stubborn things." And the fact yesterday -- and today, too -- is that in Q4 Carnival missed analyst projections for both sales and earnings. Carnival lost $2.31 per share on $1.29 billion in sales for the quarter. And it admitted that despite a revival in cruising, it's still burning cash at the rate of more than half a billion dollars per month.

Nevertheless, cruise stock investors are optimistic today. Why is that?

Perhaps the optimism stems from a generally favorable report on Carnival's earnings from the cruise industry experts at CruiseIndustryNews.com. Accentuating the positive, CIN reported that:

  • Revenue per passenger cruise day ("PCD"), when compared to "a strong 2019," actually grew 4%.
  • Carnival's fleet is now operating at 61% of capacity, and "expects the full fleet to be back in operation in the spring of 2022."
  • "Bookings for the second half of 2022 and first half of 2023 are at the higher end of historical ranges and at higher prices."
  • And "customer deposits increased [for] the third consecutive quarter" in Q4, indicating strong demand for cruise packages. 

Now what

And yes, on the face of it, that all sounds pretty propitious for Carnival stock, and for the cruise line industry in general. When read in the context of a stock market that is in general rebounding today from a three-day sell-off, I suppose it could explain why investors are buying cruise stocks with particular enthusiasm -- especially with Carnival reassuring investors that it is "well positioned for our seasonally strong summer period" just a few months away.

With $9.4 billion in the bank, even with cash burning at a rate of $510 million a month, Carnival certainly has enough cash to tide it over until that strong summer season arrives -- by which point, there's hope that the macroeconomic environment (which is to say, the pandemic) will look better for Carnival and its peers.

Of course, it remains to be seen precisely how strong the cash positions are at Royal Caribbean and Norwegian Cruise Line, and how fast they are burning their cash. You'll probably have to wait until February, however, when those two companies report earnings, to see those updates.