Cruise Stocks: Why NCLH, RCL and CCL Stock Are Sinking Today

Cruise stocks are down this morning in pre-market trading as news of a variant of the novel coronavirus set off travel bans to and from the United Kingdom, shaking investor confidence of a near-term rebound by the travel industry. Carnival (NYSE:CCL) stock was off as much as 7.5% at 8 a.m. Eastern.

Carnival cruise (CCL) ship on the water
Source: Ruth Peterkin /

The decline is a sharp reversal of fortunes for stocks of the beleaguered cruise line industry, which had seen share prices gains in the last month as vaccines were approved in Europe and the U.S. Norwegian Cruise Line Holdings (NYSE:NCLH) was up 26.3% in that period, while CCL stock rose 18.8% and Royal Caribbean (NYSE:RCL) gained 8.4%. That compared to a 1.7% rise in the S&P 500.

Austria, Belgium, Bulgaria, France, Germany, Ireland Italy and the Netherlands all announced restrictions on travel within hours of U.K. Prime Minister Boris Johnson’s announced restrictions on movement and activity in the country on Dec. 19. He said that the Covid-19 variant had been shown to be 70% more contagious than other variants.

Investors Thought the Worst Was Over for CCL Stock

Investors had thought that the worst was over for CCL stock and its ilk. On Oct. 8, Carnival released a trading update. It said, “as of Sept. 20, 2020, cumulative advanced bookings for the second half of 2021 capacity currently available for sale are at the higher end of the historical range. The company believes this demonstrates the long-term potential demand for cruising.”

On Oct. 30, the Centers for Disease Control and Prevention (CDC), the U.S. health body, issued a Framework for Conditional Sailing Order that outlines a plan for “the safe and responsible resumption of passenger cruises.”

Now, the CDC is ready to work with cruise lines to “so they can resume passenger operations with an emphasis on preventing the further spread of the novel coronavirus on cruise ships.”

Earnings Due Soon

The cruise operator was expected to report fiscal Q4 (November) earnings on Dec. 18, according to Zacks Investment Research. The consensus earnings per share forecast as for a loss of $1.79 a share, in a range of a loss of $1.86-$1.64, which reflected three upward revisions in the last four weeks.

So what to do here? With the broader market headed for what’s shaping up to be a down day, it’s likely too late to take any cruise stock profits accumulated over the past month.

On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.

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