Carnival Shares Slide On $1.5 Billion Stock Sale Plans

Carnival Corp followed American Airlines Tuesday with plans to sell 67 million in new stock as decimated travel and leisure companies capitalize on Wall Street's historic rally.

Carnival Corp.  (CCL) - Get Report shares slumped lower Tuesday after the cruise operator said it would sell around $1.5 billion in stock.

Carnival, which operates the AIDA, Costa and Princess cruises, said it would sell 67.1 million shares at what it called an 'at-the-market price' as part of a capital-building plan that follows a 40% boost for its share price over the past week. The deal will be lead by JPMorgan Chase  (JPM) - Get Report and Goldman Sachs  (GS) - Get Report (.) - Get Report

American Airlines Group  (AAL) - Get Report, another travel stock decimated by COVID-19 but boosted by last week's historic rally on Wall Street, said Tuesday it will sell 38.5 million in new shares, raising around $500 million. 

Carnival shares were marked 9.5% lower in late morning Tuesday trading following news of the stock sale to change hands at $17.43 each. The stock gained more than 40% over the past seven days as investors factored in the clean election victory of President Elect Joe Biden and the impact of Pfizer Inc.'s  (PFE) - Get Report breakthrough coronavirus vaccine.

The stock was also boosted by new guidelines from the Centers for Diseases Control and Prevention, which issued a framework for a phased re-start to cruise ship companies following their 'no sail' order from early March and an estimation in late September that vessels "continue to be an unsafe environment with close quarters where the disease spreads easily and is not readily detected."

The initial phases of the reintegration will consist of implementing safeguards for crew members, with the CDC ensuring ship operators have enough protective equipment for the crews.

The next phases will require ship operators to build the laboratory capacity needed to test passengers for covid-19. Cruise lines will then conduct simulated voyages to test ship operators' "ability to mitigate covid-19." If they pass those tests, ships will then receive certification to resume voyages. 

Carnival posted a narrower-than-expected third quarter loss of $2.86 billion in early October, with revenues collapsing from $6.53 billion last year to just $31 million.

The group noted, however, that it had $2.4 billion in total customer deposits for the three months ending in August, most of which were credits for cancelled trips.