It is no secret that cruise stocks did not have a rosy 2020. First they were a symbol of the dangers of the pandemic and then a victim of no-sail orders and ongoing Covid-19 precautions. However, one news item has cruise stocks like Royal Caribbean (NYSE:RCL), Norwegian Cruise (NYSE:NCLH) and Carnival (NYSE:CCL) soaring today. So what do you need to know about NCLH, CCL and RCL stock now?
The one big news item at play today is the quarterly conference call for Royal Caribbean. However, the story was not necessarily positive. As the company shared, earnings per share decreased more than 450% year-over-year to a loss of $5.02. While that figure beat estimates for a loss of $5.20, it reflects the current situation. Plus, revenue of $34.1 million is a huge plunge from $2.5 billion.
Those earnings clearly tell the story of a company that thrives on bringing people together and traveling the world. In other words, it tells the story of a company that thrives on exactly what consumers are not supposed to be doing right now.
However, Royal Caribbean shared another figure that is pleasing investors and boosting other cruise stocks. According to CFO Jason Liberty, reservations are up 30% in the beginning of 2021 compared to November and December. That sparks hope that when safe to do so, consumers will be cruising en masse. It also ties into a hopeful narrative that pent-up demand will drive consumer spending on everything from in-person gambling to air travel to movie theater visits.
RCL stock is now up 11.6% in intraday trading. Norwegian shares are up 9.1%, while CCL stock is up just over 10%.
Cruise Stocks: What to Know Right Now
So what else do you need to know about cruise stocks after the Royal Caribbean-fueled rally? Well, there are some clear caveats in the quarterly report.
While reservations are rising and aligning nicely with the pent-up demand story, the timeline for such a reopening remains unclear. As with earlier in the pandemic, variations of no-sail orders from the Centers for Disease Control and Prevention weigh on the sector. However, Royal Caribbean CEO Michael Bayley said the industry is getting closer to good news.
What does this mean for investors? Royal Caribbean is not alone in this optimism. A similar rally in cruise stocks occurred just a few days ago, brought on by broad support for the reopening narrative. At the time, Carnival CEO Arnold Donald said fleets should be in operation by the end of 2021. With a mass vaccine rollout continuing, that could very well be possible. As always, it is just important to be careful and do your own research. Getting in early to the reopening story will certainly have its rewards. It all just depends on how much risk you are willing to take on while things are uncertain.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.