Carnival Stock Sinks Ahead of Fourth-Quarter Earnings

The equity is carrying an over 57% year-over-year deficit

Digital Content Manager
Jan 6, 2021 at 3:30 PM
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The shares of Carnival Corp (NYSE:CCL) are down 0.8% at $20.44 this afternoon, after the cruise company notified guests of cruise cancellations and extended a pause in operations through March 31. The announcement comes ahead of the company's fourth-quarter earnings report, due out before the open Monday, Jan. 11. Below, we will take a look at how the stock has performed on the charts of late, and explore some of the options activity surrounding CCL ahead of the event.  

Digging deeper, Carnival stock has been struggling for much of this past year. The equity never fully recovered from an April 2, all-time-low of $7.80. And while the shares have somewhat risen over the past couple of months -- with support from the 40-day moving average -- overhead pressure at the $22 mark remains. Year-over-year, CCL is down 57.9%. 

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A look at the equity's history of post-earnings reactions over the past two years shows a generally negative response. During its last eight reports, six of these next-day sessions were lower, including an 9.5% drop in December 2018. Carnival stock averaged a post-earnings swing of 7.1% the last eight quarters, regardless of direction. This time around, the options market is pricing in a similar move of 7.2%.

Analysts are mostly pessimistic toward the equity, with 10 of the 12 in coverage carrying a tepid "hold" or worse rating, while the remaining two sport a "strong buy." Plus, the 12-month consensus price target of $17.58 is a significant 13.5% discount to current levels.

Meanwhile, shorts are hitting the exits in droves, with short interest falling 32.9% during the last two reporting periods. Still, the 57.50 million shares sold short make up roughly 11% of the stock's available float. 

Lastly, the security's Schaeffer's Volatility Scorecard (SVS) sits at an elevated 96 out of 100. In other words, CCL has exceeded option traders' volatility expectations during the past year -- a boon for options buyers

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