Carnival Corp. Stock Price Drops After Q2 Earnings Report

Bruce Parkinson, Open Jaw

Arnold Donald

Heading into Monday morning's second quarter earnings report. Carnival Corp. stock traded at US$63.50.  By the time the cruise giant’s earning call ended at 11 am EST, the stock was down by 9.5% to US$57.5, close to a 52-week low. It ended the day down 7.85% at US$58.54.

To put that in perspective, if the Dow Jones overall declined by 9.5%, it would be a drop by more than 2300 points. 

During the call, President/CEO Arnold Donald talked glowingly of the business, past, present, and future, introducing the call by saying, "We feel very confident about the business."

During the Q & A portion of the call, one analyst said, “Throughout this conference call, even throughout your answers to questions, your stock keeps going down. Arnold or David, [CFO David Bernstein] is there anything you'd like to say?”

Donald chuckled and said, “Look, The reality of our business is we have large adjustable markets around the world, they are all underpenetrated. We have highly differentiated product offerings... I know people are concerned about capacity but overall the industry is capacity constrained.”

He pointed to positive trends in population growth and travel in general.  

What caused the sell-off? Expectations. Carnival Corp. trimmed its full year earnings per share outlook, capacity is growing and pricing ,while slightly higher overall, is not meeting the expectations of investors. 

"Our business is strong," said Donald at the conclusion of the call.

Bruce Parkinson

Bruce Parkinson Editor-in-Chief

An observer and analyst of the Canadian and international travel industries for over 25 years, Bruce uses the pre-dawn hours to prepare a daily news and information package to keep industry members up to date.

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