Shares of cruise ship operator Carnival plc (LON: CCL) are up 31.5% in 2021 and have just broken above a significant resistance level. Will they continue rising to new highs?
The cruise ship operator was rumoured to have recently refinanced a chunk of the secured debt it took in 2020 to fund its operations amid the coronavirus pandemic.
According to sources familiar with the matter, Carnival issued a $1.8 billion loan led by JPMorgan and a €794 million ($968.1 million) loan led by Barclays bank to retire some of its outstanding loans from last year. The two loans are due in 2025.
Carnival recently announced that it would resume US sailings for vaccinated clients in July with three of its cruise lines: Holland America Line, Princess Cruises, and Carnival Cruise Linesresuming a partial season sailing from Alaska.
The guests admitted to these cruises must prove that they have received their second vaccination shot within the last 14 days before the cruises begin.
Carnival’s fundamentals appear quite shaky given its massive debt burden worth $28.38 billion as of February 2021. The company has to spend a significant chunk of its future earnings servicing its debts, which will affect its overall profitability.
Some analysts argue that Carnival’s share price already reflects its potential future earnings, including the pent-up demand for cruises cited by bullish investors and analysts. However, investor sentiment towards the company remains decidedly bullish.
From a technical perspective, The cruise ship operator’s stock price is trading at the upper end of a sideways trend, which I identified in previous articles. The simplest way to trade a range is to buy at the bottom and sell at the top.
The current setup supports the short trade thesis, but a convincing break above the level coupled with a move higher would invalidate the bearish trade setup.
*This is not investment advice.
Carnival Plc share price.
Carnival shares are up 31.5% in 2021. Can they break above the resistance level and hit new highs.