Carnival stock dives after private sale of $1 billion in convertible debt

Carnival’s stock
CCL,
-13.71%
took a 12.7% dive in morning trading, after closing Tuesday at a three-month high. Trading volume swelled to 40.3 million shares, about 30 minutes after the opening bell, enough to make it the most actively traded stock listed on major U.S. exchanges. The average full-day volume over the past 30 days is 66.8 million shares.

The offering comes after the stock had soared 30.4% amid a four-day win streak through Tuesday, and after it had rocketed 74.9% off the 30-year closing low of $6.38 on Oct. 10.

The initial conversion rate per $1,000 principal amount of notes is equivalent to 74.6714 shares of common stock. That’s equivalent to a conversion price of $13.39 a share, a 20% premium to Tuesday’s closing price of $11.16.

The $1 billion offering represents about 9.2% of Carnival’s current market capitalization of about $10.84 billion.

Before Sept. 1, 2027, the notes will be convertible at the holder’s option, upon satisfaction of certain conditions, into common stock, cash or a combination of both. After that date, the notes will be convertible at any time.

The company can redeem the notes for cash if Carnival’s stock rises above $17.41 — 56% above Tuesday’s close — on or after Dec. 5, 2025.

Carnival’s stock has dropped 13.0% over the past three months, while shares of rival cruise operators Royal Caribbean Group
RCL,
-0.89%
have run up 34.4% and Norwegian Cruise Line Holdings Ltd.
NCLH,
-3.88%
have rallied 19.0%. The S&P 500 index
SPX,
-0.83%
has declined 7.8% over the same time.