CCL Stock Drops as the CDC Investigates a Covid-19 Outbreak on a Carnival Cruise

Today, the bloodbath in financial markets continues. All major indices are once again bleeding red, with a wide swath of stocks seeing heavy selling today. One stock that is particularly struggling on Monday is Carnival (NYSE:CCL). Currently, CCL stock is down more than 8%.

Carnival cruise (CCL) ship on the water
Source: Ruth Peterkin /

Much of this move appears related to the increasingly bearish market environment. As interest rates continue to rise, investors are repricing risk assets in a big way. For assets across the board, this has provided a significant headwind.

For higher-growth stocks, this is especially true.

Carnival, like its cruise line peers, has been a pandemic reopening play. Despite seeing strong bookings, this company is still not turning a profit for investors. Accordingly, given the amount of debt the company was forced to issue, investors are looking past Carnival to companies with stronger balance sheets.

However, beyond the macroeconomic environment, there is also a company-specific catalyst weighing down CCL stock today. Let’s dive into what investors are watching right now.

CCL Stock Plunges on Covid-19 News

The Centers for Disease Control and Prevention (CDC) is investigating a Covid-19 outbreak on the company’s Carnival Spirit. This ship initially departed from Miami on April 17, docking in Seattle on May 3. However, on this voyage, a large number of guests tested positive for Covid-19, leading to its status being moved from “green” to “orange,” as per the CDC’s predetermined thresholds.

While the total number of passengers that tested positive remains unknown, what this means for certain is that more than 0.3% of the guests on this boat were positive. According to Carnival, this ship can hold more than 2,100 guests.

An outbreak is an outbreak, and investors reading the headlines may be concerned with the impact on demand such headlines bring. However, CNN reports that there are more than 60 ships in operation that are currently under “orange” status. This includes other ships from Carnival as well as peers Royal Caribbean (NYSE:RCL) and Norwegian (NYSE:NCLH).

Most of the U.S. economy has fully reopened from the pandemic, with select restrictions in certain cities. However, the cruise business is one that’s still tethered to the pandemic. What that means is that while this one investigation may not be responsible for panic, Covid-19 still plays a real role in influencing CCL stock.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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