Episode summary
Carnival Leads Cruise Stocks Lower on Weak 3Q Outlook | Bloomberg Intelligence
Bloomberg Intelligence
· · 25 min · Hosts: Paul Sweeney, Scarlet Fu · Guests: Brian Egger, Robert Schiffman, Mandeep Singh, Madison Muller
Summary
Carnival’s quarter came in softer than expected, and the discussion focused on how much of the weakness traced back to higher airfare, gas prices and disruption from conflict in the Middle East. Brian Egger said Carnival still expects positive yield growth, but the outlook for 1.75% constant-currency full-year revenue-yield growth reflects a 100-bp guidance cut since March. Even with that pressure, bookings remain solid, with the company reported as 93% booked for the year and showing positive early indications for next year.
The panel also said Carnival’s fuel exposure matters because cruising burns fuel continuously and the company has historically not hedged much of that risk. Still, Carnival is growing capacity only about 1% in 2026, a measured pace versus roughly 4% industry supply growth, which the analyst framed as prudent. The conversation extended to Vegas, where conditions were described as better than last year but still uneven, with lower-end demand softer and pricing steadier.
The second half turned to SpaceX’s post-IPO trading and its first investment-grade bond sale. Robert Schiffman argued the debt could be well received because the bonds should price wide to comparably rated credits, while Mandeep Singh said the company’s story now depends on heavy upfront capital, dilution from acquisitions, and whether long-term investors believe in the space, AI and communications expansion story.
Key takeaways
- Brian Egger said Carnival’s 1.75% constant-currency full-year revenue-yield growth guidance was cut by 100 basis points since March because of higher airfare, gas prices and Middle East disruption.
- Brian Egger said Carnival was still 93% booked for this year and had positive early indications for next year, suggesting demand remains resilient.
- The analyst said Carnival is expanding capacity only 1% in 2026, a slower pace than roughly 4% industry supply growth.
- Robert Schiffman said SpaceX’s inaugural investment-grade bond deal should attract demand because it is a scarce new credit and likely to price wide to peers.
- Mandeep Singh said SpaceX still faces dilution and heavy capital needs, and it is not a free cash flow or buyback story anytime soon.
Notable quotes
“they said 93% booked for this year and they've got some positive early indications for next year”
“the industry overall, we're looking at something like 4ish% mid-s singledigit supply growth”
“Bond holders are going to welcome SpaceX with arms wide open. You know, nobody owns this deal, right”
“this is not a free cash flow or a stock buyback story anytime soon”
How the episode opens
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Carnival Cruise Lines um reported some numbers a little bit disappointing. stock trading down about 5% here today. I think Michael Bar, Bloomberg's Michael Bar was on a Carnival Cruise Line trip last week and he goes crazy there.
We know Charlie Pellet, big cruise guy himself. So, there's a lot of cruisers around here in uh Bloomberg. Uh Brian Edgar joins us here, senior gaming and lodging analyst for Bloomberg Intelligence.
Talk to us about Carnival Cruise Lines. Um what what did what did you learn on the earnings report?
So, I mean, they're still looking for some yield growth, positive yield growth this year. I think the the change perhaps was the war in Iran quarterly had an effect affected gas prices affected air travel and the perception of the ease of air travel and some itineraries in the in the eastern mediterranean. I think the big change from their perspective is how long it lasted.
You know, it comes down to I think when they last gave guidance in March, they were not expecting we'd still be talking about this into May and June. So things have gotten better in June, but I think like you know May was a bit of a setback in terms of the duration of a conflict.
Yeah. Yep. So what are they finding about I guess just you know the typical bookings I think in the Caribbean and all that kind of stuff. How do they hold how are they holding up?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- cruise industry earnings
- airfare and gas price pressure
- space and ai credit markets
- spacex bond debut
- glp-1 drug demand outlook
Companies and tickers mentioned
- CCL
- LLY
- Carnival
- SpaceX
- Eli Lilly & Co.
Watch the episode
Watch “Carnival Leads Cruise Stocks Lower on Weak 3Q Outlook | Bloomberg Intelligence” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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