Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Carnival shares slump amid planned $500 million fire sale of stock

Carnival, the world's largest travel leisure company, has seen its share price slump after it informed the SEC of plans to sell off $500 million worth of stock to raise some much-needed cash. What now for the Carnival share price?

  • The Carnival share price has fallen 2.5% to £16.53 since 28 June
  • Carnival announced plans to sell off $500 million (£361 million) worth of shares
  • The move aims to raise much-needed cash to stem shortfalls
  • Other major cruise companies have seen their share prices fall
  • Ready to trade the Carnival share price? Open an account today

Why is the Carnival share price falling?

Carnival PLC, the world's largest travel leisure and cruise company, has seen its share price slump this week after announcing to the Securities and Exchange Commission (SEC) its intention to sell $500 million worth of company stock.

The move comes amid another challenging year for the global cruise industry, with ships continuing to be moored in harbours around the world as a result of the Covid-19 pandemic. The extensive cash burn experienced by cruise companies has meant that Carnival spent up to $650 million a month keeping the company afloat with virtually zero revenues in 2020.

Although the planned sale would raise some much-needed cash for the beleaguered company, it is also clear that the proceeds from the sale would not be used for immediate operational costs. Rather, Carnival has said that it would use the proceeds to purchase UK-listed shares of the dual-listed company.

Will the sale of Carnival shares pay off?

Following the news of Carnival's plans, other major players in the cruise industry also suffered, as market sentiment began to turn on 28 June. Norwegian Cruise and Royal Caribbean also saw similar slumps, as fear rose that the industry was entering a new phase of crises. However, it is worth noting that the overall picture of Carnival is not necessarily negative.

The Carnival share price has mounted a substantial recovery from its pandemic-level low of £6.14, driven partly by a surge in bookings for 2021 and 2022. Meanwhile, it is important to remember that Carnival is not selling shares to simply keep the lights on.

Rather, Carnival's stock purchase plan explained that it will only sell the $500 million worth of shares if ‘ordinary shares of Carnival plc are trading in a United Kingdom market at a discount to shares of common stock of Carnival corporation’, the common stock here being the US-listed Carnival Corporation. Therefore, this move is intended by Carnival to address any future price disparities between the UK and US stocks, rather than a desperate bid to raise cash.

Is the Carnival share price on the rise for the long term? Trade Carnival shares today.

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1 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.

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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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