Carnival (CCL -1.36%) stock attempted to rise above the market on Monday but came up short. The cruise line operator's shares jumped 2% in early trading before falling to a 3% decline by 3 p.m. ET on a down day for the S&P 500.
The slump was mostly due to that wider market drop, but Carnival also issued an important update spelling out its plans for resuming full operations.
The cruise giant said early Monday that it is on track to resume sailings from its Alaska port starting in May. With that move, the company will complete a reopening of all 10 of its year-round U.S. ports that had all been closed due to concerns about the spread of COVID-19.
It's good news for investors that Carnival is taking steps back toward normal operations. The speed of the reboot suggests a strong sales spike in the second half of 2022, too. In fact, many investors are looking for Carnival and its peers, Royal Caribbean and Norwegian Cruise Line Holdings, to start seeing record ticket prices again, along with improving volumes, by this summer.
Yet Carnival is far from returning to profitability. And the significant debt burden it took on to survive the global halt of sailings will be a stubborn drag on earnings.
That factor puts rising interest rates high on the list of investors' worries, which now includes concerns about geopolitical strife. A conflict involving Ukraine might spark new travel advisories and restrictions just as COVID-19-related pressures are easing.
Even accounting for those risks, investors can reasonably expect Carnival to post much stronger fiscal results this year than shareholders have seen since 2019. But the cruise line stock will likely remain volatile until there's a clearer demand picture, as well as steady cash flow funding the company's operations.