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

Today, shares of cruise stocks are seeing some serious red.

a cruise ship in the ocean with the sun going down


Industry leaders such as Carnival (NYSE:CCL), Norwegian Cruise Lines (NYSE:NCLH) and Royal Caribbean (NYSE:RCL) are all down between 4% and 6% at the time of writing.

Today’s move marks a sharp reversal of some pretty strong upside momentum these cruise line stocks have had year-to-date. It appears investors are now pricing in a higher level of risk related to the timeline of the reopening for the cruise line industry today.

Here are a few things investors are watching today.

Cruise Stocks Sink on Reopening Concerns

Investors in cruise ship operators such as Carnival have seemingly been dissuaded by today’s news that the Conditional Sailing Order halting cruises is likely to remain in place. This news is a result of the existing U.S. public health emergency being extended.

Today, the CDC’s Conditional Sail Order, which prohibits cruises until Nov. 1, seems to be more firm than previously thought. This Conditional Sail Order is only in effect as long as a public health emergency is in effect. Today, the Secretary of Health and Human Services, Xavier Becerra, extended this order again. The public health emergency order has been extended every three months, and this is the fifth such extension.

Accordingly, investors bullish on the accelerated vaccine rollout resulting in the removal or winding down of this public health emergency have been thwarted. This announcement appears to suggest the Nov. 1 CSO is likely to remain in place.

Today’s news builds on top of last week’s announcement that Rep. Doris Matsui and Senator Richard Blumenthal penned a letter to the U.S. CDC to urge the strict enforcement of the CSO in place. When cruises do resume, the letter requests that cruises be immediately halted if outbreaks occur.

Investors hopeful for an earlier restart are starting to rethink this thesis. Indeed, there has been room for optimism on this front. Recent political pressure and lobbying efforts aimed at getting the cruise industry restarted sooner than the Nov. 1 date brought such optimism.

Now, question marks remain for investors in CCL stock and other cruise operators.

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

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