After a volatile six months, Carnival (NYSE:CCL) is trying to give investors some hope for the future. The leading cruise line operator recently announced that it has reached an agreement with German shipmaker Meyer Werft to produce a new luxury cruise ship. The vessel will be a sister ship to the company’s well known Carnival Jubilee ship.
Unfortunately for investors, it won’t be hitting the high seas until 2027. That’s likely why this news hasn’t boosted CCL stock by much today, despite the fact that it certainly stands to benefit the company in the long run.
How should investors react to a far-off catalyst for a company that is currently facing some significant problems? Let’s take a closer look at Carnival and assess what the future likely holds.
What’s Happening with CCL Stock
Since the Covid-19 pandemic wreaked havoc on the tourism industry, CCL stock has been trying to make up lost grown. It hasn’t been easy. Shares are up more than 25% for the year but they are nowhere near where they were before 2020. It’s hard to be optimistic about a company that used to trade at almost $60 per share but since the pandemic, has had trouble breaking $15.
Now the company is facing new obstacles and assessing its prospects is complicated. If the Federal Reserve moves forward with interest rate cuts, it could easily spur the type of growth that could boost CCL stock.
However, rising tensions in the Middle East have caused Carnival to reroute “12 ships across seven brands” in order to have them avoid the Red Sea. If these international problems persist, cruise lines could face negative impacts as consumers opt against traveling by ocean liner.
On the date of publication, Samuel O’Brient 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 InvestorPlace.com Publishing Guidelines.
