Cruise Stocks Alert: Why Are RCL, CCL, NCLH Stocks Stumbling Today?

Just as the decline of Covid-19 cases begins to ease travel anxiety, a new crisis is threatening to derail aspiring tourism plans. Russia’s recent invasion of Ukraine has sent negative shockwaves through many industries. As it turns out, this includes the cruise line section of the travel sector. Cruise stocks were already coming off of a difficult season. Since this week began, they have been plunging downward as the Russian navy’s presence on the Black Sea has forced cruise lines to halt or re-route operations.

cruise stocks docked cruise ships
Source: Kokoulina / Shutterstock.com

What’s Happening With Cruise Stocks

As noted, this season was difficult for cruise stocks before Russia launched any attacks. The late 2021 spread of the omicron variant compelled consumers to abandon any plans to take a cruise vacation, causing stocks to fall across the industry. Now, as the cold weather gradually fades, Russian President Vladimir Putin’s military campaign against Ukraine is once again forcing potential passengers to abandon ship.

All major cruise stocks began this week in the red and have only kept falling. Norwegian Cruise Line Holdings (NYSE:NCLH) is down almost 5% for the day. Royal Caribbean Cruises (NYSE:RCL) has seen shares fall by almost 9%. As of this writing, Carnival’s (NYSE:CCL) declines have pushed past 9%.

Why It Matters

While the world waits for news surrounding the Russia-Ukraine conflict, much remains uncertain. For investors, that’s never good news. Wall Street hates uncertainty, and cruise stocks were already facing an uncertain future. These industry disruptions are only going to paint them as a less stable investment.

No one is able to speculate as to when the firing in Ukraine will cease. The first round of discussion between the warring nations did not yield any results. However, more have been scheduled for tomorrow. And while cruise lines claim to be taking steps to find alternative ports, no company has issued any statements of progress so far. Last week, Carnival tweeted the following:

While it’s hard to predict exactly how severe the impact of these battles off the eastern European coast will prove for cruise lines, the industry disruption should not be ignored. If the recent performance of cruise stocks is any indication, it is shaking investor confidence and causing negative market momentum.

What It Means

Even cruise lines operating far away from the conflict zone are feeling the effects of the ongoing battle. It’s easy to see how serious this is when we consider that two of the cruise stocks named here just announced a new mask-optional policy, and shares are still sinking. None of this bodes well for the immediate future of the industry.

As noted, there is much that we don’t know about how this geopolitical crisis will shake out. A ceasefire could be reached sooner than expected, or it could drag out longer than anyone wants to entertain the possibility of. When the world is once again at peace, cruise stocks will be able to regain the ground they have lost. However, that means they will need to see quite a bit of growth before investors can feel confident again.

On the date of publication, Samuel O’Brient 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.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.


Article printed from InvestorPlace Media, https://investorplace.com/2022/03/cruise-stocks-alert-why-are-rcl-ccl-nclh-stocks-stumbling-today/.

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