Carnival Cruises' shares, the largest cruise company in the world, and its counterparts made a decent performance Monday in the midst of a big rally on the market. The stock hit over $10 in pre-market sessions, up 20 percent.
One possible bit of uplifting news for Carnival is the sovereign wealth fund that Saudi Arabia recently took to the tune of 8.3 percent stake in Carnival. The recovery follows Friday's sharp selloff of the cruise firm's shares.
The Saudi Arabian Public Investment Fund is now Carnival Cruises' third-biggest shareholder, with a market value of around $7 billion. The Fund's interest in the company is projected at almost $370 million. Carnival shares, at last review, were 20 percent higher at $10.29.
While details about the fund's capital infusion with Carnival has yet to be verified, as of its 4th-quarter SEC filing, the fund did not own any stocks in Carnival. The fund's investment in Carnival was over 5 percent on March 26 according to a Securities and Exchange Commission document.
Carnival has benefited from a growing generation of so-called 'baby boomers' for much of the last 10 years. The cruiseliner was enroute to add 18 new vessels in the next five years to its fleet of over 100 global ships going into 2020.
Unfortunately, Carnival has encountered an almost worst-case scenario to kick off the 2020s, following a strong decade of profits. The coronavirus' devastation has shut down all Carnival activities, and capitalists face a blank wall when they will normalize and how much demand there would be for holidaymakers to be crammed into a cruise ship for days.
The Kingdom's Public Investment Fund manages over $300 billion and has invested heavily in companies such as Tesla and Uber.
The financial impact of Saudi Arabia on the public and private markets has been under scrutiny since Jamal Khashoggi's murder in October 2018. The Central Intelligence Agency blamed the murder of the journalist on Saudi Crown Prince Mohammed bin Salman who presides over the PIF.
Meanwhile, under a "zero sail" scenario outlined by analysts at Wells Fargo Securities, Carnival has enough resources to hold the business afloat through November.
In a more positive scenario, however, which suggests that some sailings resume in the summer, the company's prospects will improve - although this year's profitability will still take a major hit.
Under this case, the operating cash flow of the organization will decline from last year's $5.7 billion to around minus $2.2 billion this fiscal year. Wells Fargo analysts see it rebounding next year to about $1.4 billion.
