By Kuldip K. Ambastha
Carnival Corporation (CCL) is well-known as a cruise operator and as a prominent travel / leisure company. This British-American company has struggled recently due to the coronavirus pandemic seen worldwide. However, during this week, the company had strong days on Monday, April 6, 2020 and Tuesday, April 7, 2020, returning 20.3% and 10.7% on those respective days, because of an assist from the Public Investment Fund (PIF) of the Kingdom of Saudi Arabia (KSA). In the past few years, HRH Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud has been making efforts to transition the KSA away from oil and gas revenues, and the PIF was created (as a Saudi sovereign wealth fund) as part of his broader efforts to successfully execute upon the Saudi Vision 2030 during the reign of his father, HRH King Salman bin Abdulaziz Al Saud.
The PIF has purchased 43.5 million shares of Carnival Corporation, which makes for a 8.2% stake in the company. Reports of this purchase led to the 20.3% and 10.7% returns noted above. Prior to this infusion from the PIF, Carnival Corporation’s stock was suffering since the coronavirus pandemic has had a material negative impact on all parts of the company’s business. Global cruise operations have been suspended. Some ships have been quarantined.
Port closures and travel restrictions are present all over the world at this time. Due to the dire circumstances seen at this time, the Carnival Corporation had fully used up its $3 billion revolving credit facility on Friday, March 13. The company also raised $6 billion across both debt and equity instruments. The capital infusion from the PIF is a vote of confidence in an embattled company. That said, plenty of risks still abound for Carnival Corporation going forward, especially if the coronavirus pandemic continues for a long time with no potential vaccine present.
Keywords – Carnival Corporation, CCL, cruise, travel, leisure, tourism, Public Investment Fund, PIF, sovereign wealth fund, SWF, Kingdom of Saudi Arabia, KSA, Saudi Arabia, HRH King Salman bin Abdulaziz Al Saud, HRH Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud, Saudi Vision 2030, coronavirus, novel coronavirus, COVID-19, pandemic.
Disclosure – The principals and clients of Ambastha Financial LLC have no positions in CCL.
Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.