Is Carnival A Buy At These Levels???

Carnival is the largest cruise company in the world, with more than 100 ships on the seas that attract over 12 million travelers each year across brands that include its namesake Carnival Cruise Lines, along with Holland America, Princess Cruises and Seabourn in North America; P&O Cruises in the United Kingdom and Australia; and Aida in Germany Carnival Corp.

If Carnival goes out of business, the could always get into the public relations business. Carnival’s Princess brand accounted for the first two known episodes of coronavirus transmission on cruises.

The entire Diamond Princess ship was quarantined where passengers were confined to their cabin. However, over 600 people got infected during those two weeks, including two passengers that have since died. The CDC noted the they the virus on surfaces in the cabins 17 days after passengers had left the cabins.

Since that time, the Princess Cruises is canceling all voyages through June 30, 2020. Since that time Princess Cruises cruises had announced a voluntary pause for two months impacting voyages departing March 12th to May 10th. But recently the extended that cancellation through June 30th.

Carnival and other companies in the industry recently was through another curve ball when the Centers for Disease Control and Prevention extended its initial No Sail Order an additional100 days…until late July.

So what did Carnival do, rightfully so, the sought out additional capital?

Carnival is issuing $6 billion in stock and debt as the beleaguered cruise ship company tries to shore up its finances after suspending operations following COVID-19 outbreaks on at least three of its ships.

The company said Tuesday it plans to issue $1.25 billion in stock, $3 billion in secured notes and $1.75 billion in convertible notes all due 2023. Carnival’s stock dropped by about 15% in premarket trading after the announcement, but recovered after the markets opened and was up more than 9% at midday.

“We cannot predict when any of our ships will begin to sail again and ports will reopen to our ships,” the company said in a securities filing. “Moreover, even once travel advisories and restrictions are lifted, demand for cruises may remain weak for a significant length of time and we cannot predict if and when each brand will return to pre-outbreak demand or fare pricing.”

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Carnival Corp. CEO Arnold Donald defends his company's response during the coronavirus outbreak and insists that cruising did not place passengers in a risky environment. I give him a lot of credit, he's been brave enough to go on CNBC several times, most recently yesterday. Yesterday on CNBC Donald said travel and leisure and social gathering are going to return and when it does, Carnival will be right there with it. He also said the company has substantial bookings for 2021 season.

Someone or some entity must agree. Carnival came into some luck when the Saudi Arabia's Public Investment Fund became the third-largest stakeholder in Carnival when the fund purchased over 40 million shares or 5% of the company a couple of weeks ago.

We also see some insiders buying shares too. Director Randall J. Weisenburger bought 1,250,000 shares on April 6 at the average price of $8.

TD Ameritrade’s JJ Kinahan said millennials have been adding Carnival Corp. to their portfolios as they might be some of the first customers when the cruise liners return to the sea.

So is Carnival a buy at current levels, the chart suggests to wait until and if price hits the monthly demand at $5?