Carnival Shares Fall as Spending Rises After Disappointing Expectations

Carnival (CCL) experienced the most substantial decline among stocks in the S&P 500 on Monday, with a 7.6% drop, as the cruise line's projected profit for the current quarter failed to meet expectations. Competitors Norwegian Cruise Line Holdings (NCLH) and Royal Caribbean (RCL) also saw their share prices decrease.

Key TakeAway

• Carnival shares plummeted on Monday following the company's disappointing earnings forecast for the current quarter.
• The cruise line operator cited unexpectedly sluggish inflation decline as a factor that will elevate expenses.
• Carnival's second-quarter revenue soared to an unprecedented level, while its deficit came in lower than anticipated.

Carnival anticipates that its earnings per share (EPS) for the third quarter of fiscal 2023 will fall within the range of $0.70 to $0.77. Financial analysts had previously projected a profit of $0.76.

According to CFO David Bernstein, the company adjusted its expense outlook due to a slower-than-expected decrease in inflation for port operations, freight, and crew travel.

Despite these challenges, Carnival reported a record-breaking revenue of $4.91 billion for the second quarter, along with a loss of $0.32 per share, both surpassing estimates.

CEO Josh Weinstein highlighted Carnival's success in achieving higher ticket prices while maintaining elevated levels of onboard spending, increasing occupancy rates, and expanding capacity.

Despite the decline in share prices on Monday, Carnival's stocks have gained over 75% year-to-date.