Shares of Carnival Corporation & plc (NYSE: CCL) took a sharp dive today, dropping more than 10% and emerging as the worst performer in the S&P 500. This decline comes despite the company having surpassed earnings expectations and provided optimistic guidance for the full-year 2023.
In the fiscal second quarter, Carnival reported a narrower loss of $0.31 per share, surpassing analysts expectations of a $0.34 loss, according to a Bloomberg poll. In addition, the company achieved record-breaking revenue of $4.91 billion, exceeding estimates of $4.77 billion.
Carnival provided a positive outlook for the future, guiding an adjusted EBITDA between $4.10 billion and $4.25 billion for the full-year 2023. This range represents an increase of $175 million from their previous guidance in March.
Despite the recent decline, Carnival’s stock had been performing exceptionally well throughout the year. It had soared more than 50% over the past three months and nearly 100% year-to-date before Monday’s stock drop.
The downward trend in Carnival’s stock value had a ripple effect on its competitors as well. Shares of Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) and Royal Caribbean Cruises Ltd. (NYSE: RCL) also experienced declines of approximately 6% and 3%, respectively.
Carnival’s CEO, Josh Weinstein, expressed optimism about the company’s future, citing strong demand and record-high bookings and customer deposits. He revealed that booking volumes were 17% higher than in 2019, indicating a positive trend. Weinstein also mentioned that the 2024 booking position is currently at “record levels.”
However, it’s worth noting that some analysts had already expressed bullish sentiments toward Carnival leading up to the earnings release. Bank of America analyst Andrew Didora, in a note published on June 12, stated that the “cruise recovery is now stable” and highlighted the industry’s long booking window and strong current demand, which could potentially make it more resilient to leisure consumer slowdown compared to other travel sectors.