Multiple factors are pushing cruise stocks down today. Industry leader Carnival (NYSE:CCL) has spent the year battling choppy market conditions. But yesterday the popular cruise line reported earnings for the third quarter of 2022, revealing a truly grim landscape for the sector. The report strongly indicated that the company is facing an uphill battle due to rising inflation costs and supply chain constraints. News of this outlook send CCL stock plunging to its lowest point since the Covid-19 pandemic broke out. That isn’t the only bad news facing cruise stocks, though. Hurricane Ian is still raging hard, making its way across the southern part of the United States and causing severe disruptions for the travel industry.
As of this writing, CCL is down more than 22% for the day with no turnaround in sight. But things aren’t going much better for other cruise stocks. Royal Caribbean Cruises (NYSE:RCL) has fallen more than 12% and Norwegian Cruise Line (NYSE:NCLH) has plunged by more than 17%. Things were looking grim enough for the sector before the hurricane made landfall. Now that it is picking up strength, investors have even more cause to worry. Today’s events are a good reminder of what can happen when economic headwinds collide with an environmental disaster.
Let’s take a closer look at what investors can expect from the cruise line industry.
What’s Happening With Cruise Stocks
Just how poor were Carnival’s earnings? Of its $4.3 billion in revenue, the company reported a net loss of $770 million, equal to $0.65 per share. As InvestorPlace contributor William White reports:
The company’s revenue of $4.31 billion also isn’t helping CCL stock today. That’s next to analysts’ estimate of $5.07 billion for the period. On the bright side, it’s better than the $546 million in revenue reported during the same time last year.
Its operating costs and expenses for the quarter reached $3.4 billion, though, a steep increase from the previous quarter’s $1.6 billion. This important figure is indicative both of recent inflationary trends and supply chain constraints. But it should also serve to remind investors of the increasing costs of health and safety measures facing the industry. When we consider that, it’s easy to see why sentiment toward cruise stocks may be shifting.
Despite its clear red flags, CCL isn’t the only name among cruise stocks facing choppy waters. All three companies were recently flagged as stocks to sell due to economic conditions working against them. “The current economic headwinds have thrown a wrench in the plans of major cruise liners, which were looking to mount a comeback,” noted InvestorPlace contributor Muslim Farooque.
Now nature has thrown yet another wrench into any plans these cruise stocks had. Hurricane Ian is quickly spreading across to other states after wreaking havoc on coastal Florida. The severe storm has already generated enough turbulence to push airline stocks down and the cruise line industry won’t fare any better. Ian is projected to continue moving, meaning that investors should prepare for turbulence for all travel industries with ties to the water. While the storm will ultimately pass, the dismal industry landscape is likely to pose effects that will linger over the cruise line sector throughout the coming quarter at least.
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.