Cruise line stocks had a rough start to the week as investors pondered the war between Russia and Ukraine and the economic fallout. Carnival (NYSE: CCL) closed the day down 9.9%, its low for the day.
What happened to cruise lines today
The biggest reason for today's move was oil prices climbing because Russia's supply is more uncertain than ever. Russia supplied about 11% of the world's oil until recently, and as sanctions pile up, it's hard to see how that will continue or what country will fill the gap.
Image source: Getty Images.
As a result, the price of oil has jumped 4.7% today to $123.60 per barrel of Brent crude. This will mean higher costs for Carnival, but also likely means travelers will have less money to spend on cruises.
Rough seas ahead
Until recently, Carnival was a pandemic recovery story. The company took out tens of billions of dollars in debt to survive the pandemic and then hoped to thrive when travelers returned. Now, that recovery might be put off even longer.
CCL net income (TTM). Data by YCharts. TTM = trailing 12 months.
In the meantime, losses are piling up and cash flow is at unsustainable levels. I don't see a bright future for Carnival, and investors seem to be coming to the same realization today.
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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.
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