Should I Buy Shares in a Cruise Liner?

Hi Scott,

I am about to receive money back from Princess Cruises, due to a cancelled cruise. The owner of Princess Cruises,  Carnival Corporation, has just seen its share price hit a record low. With this in mind, I am considering purchasing 10 Carnival shares. This will benefit us, as shareholders get $250 on-board credit for every future sailing of over 13 nights. We are already platinum status members and plan on continuing to build our loyalty. Is it a good idea to buy now?

Dorothy

Hi Dorothy,

So you’re talking about the tub that kicked off the coronavirus in Australia, right?

Just making sure.

Let’s be honest — your motivation for making this investment starts and ends at the minibar. You’re thinking of buying some shares simply to get the shareholder discount.

And I’m perfectly okay with that, so let’s sail:At pre-corona levels, 10 shares in Carnival Corp cost around $850 Aussie.

Today those 10 shares are going to set you back around $280, and you get a $250 credit!

And the more cruises you take, the more shareholder credits you can spend!

Then, when you’ve worn out your sea legs (or hips), you can sell your shares, hopefully at a profit.

Really, the only downside is if the company goes broke. And if there’s a second wave of infection, Carnival Corp could very well sink: the company burned through $US12.9 billion of expenses in 2019 … and post a capital raising they’ve only got $US7.6 billion in cash on their balance sheet.

Yet let’s be honest: if contracting a highly infectious and potentially fatal disease doesn’t bother you, losing a few hundred bucks is the least of your worries. That being the case, if I were in your boat shoes I’d take the punt and buy the shares.

Bon voyage!

Scott