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New York Cybersecurity Lawsuit Threatens to Rain on Carnival’s Q2 Parade

  • Shares of Carnival (CCL) stock surged more than 11% on strong earnings.
  • However, a new lawsuit tied to a 2019 data breach may pour cold water on this bullish sentiment.
  • Investors appear to be brushing off these concerns, taking the high road today.
Carnival cruise (CCL) ship on the water
Source: Ruth Peterkin /

Carnival (NYSE:CCL) is one of today’s biggest movers on an overall up day for the markets. Shares of CCL stock are surging more than 11% after the company reported a surprise jump in second-quarter revenue.

With so much volatility these days, investors have clearly been looking for pockets in the market to de-risk their portfolios. Stocks that were the hardest-hit by the pandemic — and thus seen as pandemic reopening plays — are one area investors have been reassessing. Accordingly, as a top cruise line operator, Carnival has seen its share price cut in half this year.

However, these recent earnings results suggest that the summer travel season could still be as good as many had previously thought. Bookings remain strong and the health of the consumer, while tested, isn’t dire yet. As such, investors clearly have a key catalyst to jump on right now.

There is some recent news that could rain on Carnival’s parade, however. Investors are closely monitoring a new lawsuit tied to a 2019 data breach that could be the latest headwind to sink CCL stock.

Let’s dive into the news — and whether investors should be brushing it off like they are today.

What Does This Lawsuit Mean for CCL Stock?

According to recent reports, regulators in New York have fined Carnival $5 million for previous data breaches. This rather substantial fine is on top of a previous settlement Carnival reached with other states.

It’s unclear how successful New York will be in imposing this rather large fine, given the size of the previous settlement. It’s also likely that Carnival will seek to settle the dispute as well.

So, in the grand scheme of things, perhaps this headline isn’t worth considering. After all, we’re talking about a few million dollars; Carnival already has billions in debt that it’s trying to work through.

However, investors should consider the fact that Carnival needs to fight yet another battle. The company has faced a series of headwinds, each diverting attention from it core business. Whether it’s pandemic-related restrictions, other regulatory issues related to global travel, or Carnival’s debt burden, there’s a lot to be concerned about with CCL stock. That makes shares difficult to value right now.

On the date of publication, Chris MacDonald did not hold (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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