Carnival Share Price Forecast as Cruise Demand Spikes

Summary:

What is the outlook of the Carnival share price? We explain what to expect in the near term as the cruising industry bounces back

The Carnival share price has bounced back as investors remain optimistic about the cruise industry. The stock jumped by more than 2% in New York after it rose by more than 3% in London yesterday. It has jumped by more than 35% since the year started.

The background: Carnival is the world’s biggest cruise line in the world with a market capitalization of more than $26 billion. Its biggest competitors are Royal Caribbean and Norwegian that have a market cap of $22 billion and $11 billion, respectively. The company’s stock is dual-listed in London and New York.

All cruise line businesses have been under pressure since the pandemic started since many countries banned their activities. As a result, the company parked their large ships and decommissioned a sizable amount. As a result, their cash burn soared to a record high.

This year, however, the stocks have done relatively well as countries ramp up their vaccination efforts. There is also a feeling that the industry will do well since people spent most of their times at home in 2020. Indeed, the three companies have started reporting strong bookings for 2022 despite limited advertising. The US has already passed a law that will reopen Alaskan journeys in July while the UK has seen its first cruise since the pandemic started.

Growth prospects have helped to offset worries of low profitability. Analysts expect that Carnival will take a few years to go back to pre-covid levels. There are also concerns that ESG investors will shun the industry for its carbon emissions. This has seen companies boost their spending on alternative energy sources. For example, Carnival has launched two natural gas ships.

Carnival share price forecast

On the four-hour chart, we see that the Carnival stock price has been on an upward trend recently. The stock has jumped from the support of 1,480p to the current 1,695p. It has also moved above the 25-day and 15-day exponential moving averages (EMA). Also, it has managed to invalidate the head and shoulders pattern by moving above the right shoulder. Therefore, in the near term, the shares will likely keep rising by about 10% as bulls target the year-to-date high of 1,850. On the flip side, a drop below 1,600p will invalidate this trend.