I’m quite highly exposed to Carnival. Bought shares last year because after looking at them, I thought they looked undervalued. Long story short - they’ve kept going down since.
Intitially I bought in the dips because I thought the fundamentals were still sound and that they would rebound to a certain extent. Unfortunately for me, there were so many dips that I had to stop because if I kept buying my portfolio would be unbalanced and I would be overexposed.
They do seem to have been a lot more vulnerable than I expected to what turned out to be many, many different things.
Oil is an obvious one, they were affected by rising oil prices because of their fuel costs.
But things like Trump being an arse over Cuba, and various turmoil over the world had much more of an effect than I expected. Just takes one port that they can’t stop at for a period and the shares take a hit.
The Coronavirus was just the latest unpleasant surprise.
There does seem to be a slight paradox in that while they are persuading more people to buy cruises, they’re paying less for them, so customer numbers are almost a red herring as the profit chart isn’t showing the same growth.
Carnival are also more exposed to issues affecting the cruise industry than you might expect because of their surprise - as well as the headline Carnival brand, they also own Holland America, Costa, Aida, P&O Cruises, Princess, Seabourn, and Cunard.
As it stands, I can’t justify increasing my investment in them. If I was starting from scratch at this point? Possibly, but as the 5-year graph indicates, it’s potentially risky.
Fundamentally I think they are still undervalued - but the problem seems to be that the market consistently continues to undervalue them and shows no sign of correcting.
(For sake of disclosure, I have sailed on Carnival, P&O, and Cunard in the past, of the Carnival brands.)