Carnival 'victim of own success' as shares plummet despite earnings beat

Carnival Corp. (CCL) stock fell more than 10% on Monday, making it the biggest laggard in the S&P 500 despite an earnings beat and better-than-expected guidance for the full-year 2023.

Citi Leisure and Travel Analyst James Hardiman told Yahoo Finance Live he believes Monday's negative stock reaction could stem from Carnival's strong start to the year.

"[Carnival] is to some degree a victim of [its] own success," the analyst said. "As I talk to investors over the last week or two, it really felt like expectations had gotten ahead of themselves. We were hearing some pretty unreasonable whisper numbers in terms of the profitability for the current quarter, but at the end of the day, if you had showed me these results three months ago I think everybody would be doing back flips."

The cruise liner reported a loss of $0.31 in fiscal second quarter — narrower than the $0.34 loss expected by analysts polled by Bloomberg. Revenue, meanwhile, hit an all-time high of $4.91 billion, topping estimates of $4.77 billion.

Carnival guided to adjusted EBITDA between $4.10 billion to $4.25 billion for full-year 2023, "above March guidance’s range and with a midpoint increase of $175 million."

Carnival's stock has been on a tear this year, soaring more than 50% over the past three months and more than nearly 100% year-to-date prior to Monday's release.

Shares of competitors Norwegian (NCLH) and Royal Caribbean (RCL) followed Carnival's declines, falling roughly 6% and 3%, respectively.

Carnival said it continues to see strong demand "with bookings and customer deposits hitting all-time highs," CEO Josh Weinstein said in the earnings release.

On the earnings call, Weinstein said booking volumes were 17% higher than 2019, adding the 2024 book position also sits at "record levels."

Still, as Hardiman highlighted, Wall Street had already grown bullish on Carnival heading into the print, with multiple Wall Street analysts upgrading the stock in recent weeks.

Bank of America analyst Andrew Didora said the "cruise recovery is now stable" in a note published on June 12, writing, "In our opinion, the cruise industry's long booking window and strong current demand could allow it to be less susceptible to a slowdown in the leisure consumer relative to other areas of travel."

Long Beach, CA - February 17: An aerial view of the Carnival Radiance, a Destiny-class cruise ship, as it heads out to sea in Long Beach at sunset Friday, Feb. 17, 2023. (Allen J. Schaben / Los Angeles Times via Getty Images)Josh Schafer is a reporter for Yahoo Finance. Follow him on Twitter @_JoshSchafer

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at here for the latest stock market news and in-depth analysis, including events that move stocks

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