Cruise stocks are taking a bit hit today. Indeed, shares of Carnival (NYSE:CCL), Royal Caribbean Cruises (NYSE:RCL) and Norwegian Cruise Line (NYSE:NCLH) are all slumping by at least 15% over the past week. News of the omicron variant is hammering down travel and vacation names as investors re-evaluate their current holdings. Additionally, the first case of the omicron variant in the U.S. was confirmed today in California.
Yesterday, Stéphane Bancel, the CEO of Moderna (NYSE:MRNA), spooked investors when he noted that current vaccines may be less effective against the omicron variant.
On the other hand, BioNTech (NASDAQ:BNTX) co-founder Ugur Sahin relayed a more calming message: “Don’t freak out, the plan remains the same: Speed up the administration of a third booster shot.”
Indeed, top epidemiologists still say that it is too early to truly understand the severity of the omicron variant. Additional data should be presented in the coming weeks from world governments and vaccine-makers. However, investors should expect more volatility in cruise stocks until the severity of the omicron variant can be accurately determined.
Cruise Stocks: Can They Set Sail From Here?
Investors in these three cruise liners should monitor the omicron variant situation carefully, as well as any travel and grounding restrictions that arise. It’s inevitable that some current passengers may cancel their cruise trips after hearing about the new variant.
On the bright side, both Moderna and Pfizer (NYSE:PFE) stated that if necessary, a new vaccine for the omicron variant could be available by the first quarter of 2022.
Additionally, Royal Caribbean and Norwegian Cruise Line already require all passengers who are 12 years and older to be fully vaccinated before boarding. Carnival is operating a bit differently and designating certain cruises as “vaccinated cruises,” where all passengers must be vaccinated. However, vaccinated cruises make up a majority of Carnival’s current cruise options.
In terms of earnings, all three cruise companies will likely be unprofitable this year. This is largely due to the pandemic and lockdowns. However, they are all forecasting profitability for 2022.
Additionally, Cruise Industry News reported today that 239 cruise ships from 68 global brands are planning to set sail during December. This figure represents an additional nine cruise ships when compared to November and an additional 33 when compared to October. Of the 239 ships setting sail this month, Royal Caribbean accounts for the majority, with 20 ships. Carnival clocks in at second place with 17 ships, and Norwegian Cruise Line falls in fourth with 11 ships.
This is great news for the cruise industry as people return to relaxing on the seas. Investors in cruise stocks will want to see an uptick of ships setting sail in January. However, we will have to wait and see if that happens given the uncertainty surrounding the latest pandemic developments.
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.