Carnival's stock struggles; earnings report needed soon

Carnival's stock has dropped significantly in 2025, falling 16% so far this year. This decline is part of a wider trend affecting major cruise lines. Smaller competitor Norwegian Cruise Line has seen its shares tumble by 22%, while Royal Caribbean has experienced a lesser drop of 5%. Last year, these companies saw strong gains, with Carnival, Royal Caribbean, and Norwegian rising between 28% and 79%. Several factors are contributing to the struggles of these cruise lines. Tensions from trade tariffs and geopolitical issues are impacting demand for cruises. Additionally, consumer confidence has decreased for three months in a row, making it harder for people to afford vacations. A recent comment from Commerce Secretary Howard Lutnick about potentially cracking down on tax practices used by cruise lines adds more uncertainty for investors. This week, Carnival will report its financial results for the first quarter. Analysts expect modest revenue growth of 6%, totaling about $5.74 billion. They predict a small profit of $0.02 per share, a turnaround from losses last year. Historically, Carnival has exceeded expectations in similar reports, which raises hope for a pleasant surprise this time around. Beyond financial results, analysts will monitor customer deposits for future sailings. This metric jumped 7% compared to last year, suggesting positive near-term prospects. If demand is softening, it may be evident in this number. Investors are also curious to see if Carnival will address Lutnick's tax comments. Despite the challenges, Carnival's stock may be more attractively priced now. Analysts have raised their profit projections for the year and expect Carnival to earn $1.76 per share. With a stock price that is relatively low compared to these estimates, investors hope that Carnival will provide strong results, encouraging them to invest as they believe the situation will improve.