Carnival Corporation's Stock Price Plummets Following Costa Cruise Crash

With controversy surrounding Carnival Corporation CCL at this very moment, it is no wonder its stock price fell so rapidly over the last few days, down 10.88 percent from the weekend. The moment Costa Concordia ran aground off the coast of Italy, CEO Micky Arison may as well kissed a portion of his insurmountable fortune away for the time-being. While Arison, 62, mutely basks in his billions, Costa unit CEO Pier Luigi Foschi performed damage control by holding press conferences to answer questions. Obviously, tourists from all walks of life are upset, dismayed and want immediate answers for the six lives that were lost, the 27 that are still missing and their own peace of mind. Foschi reassured those at a press conference that Carnival's management had offered to come down to Costa if necessary, which may prompt the sarcastic response “Oh, how thoughtful of them!” Arison did, however, take the time to make a statement regarding the horrific accident: “Our priority is the safety of our passengers and crew. We are deeply saddened by this tragic event and our hearts go out to everyone affected by the grounding of the Costa Concordia and especially to the families and loved ones of those who lost their lives.” Beyond rebuilding Carnival's reputation in the public eye, what else can be done to reignite the trust and pleasure stock holders once had invested in the company that many have decided to leave behind? Turns out not much, as it is likely that the effects of Costa Concordia will not be extremely long-lasting and stock prices will probably climb again in the near future. Deutsche Bank reiterated its Buy rating on Carnival Corporation yesterday, but did lower its PT from $44 to $38. In a Citi recap report, it is noted that, “Costa is Europe's largest brand and is CCL's 3rd largest in terms of capacity (roughly 16% of global capacity). We expect this tragedy to be an overhang on CCL and RCL until we get more clarity on the impact to future cruise demand (which could be adversely affected by the negative impact from media coverage).” Much of the blame for this incident is being placed upon the Captain, Francesco Schettino, as the ship was routed electronically before it took off. However, at this point, no one knows for absolute sure why the ship veered too close to the rocks. Historically, Carnival has never seen a worse accident than this. “We note the pictures and videos from the Costa tragedy are more graphic and widespread than past incidents and it occurred during the heavy booking period of Jan-March (Wave season),” Citi stated when discussing the future of CCL. “The media coverage could also be prolonged as the 100-year anniversary of the Titanic is in 3 months.” CCL closed today at $30.55, down 35.12 percent year-over-year.