Why Carnival, Royal Caribbean and Norwegian Cruise Line stocks are down today

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What happened

Cruise ship stocks fell on Tuesday after reports of additional travel delays surfaced. At the close of negotiations, the actions of Royal Caribbean (NYSE: RCL) and Norwegian Cruise Line Holdings (NASDAQ: NCLH) were down 4.9% and 5.3%, respectively, while the two Carnival stocks Carnival Corporation (NYSE: CCL) and Carnival Plc (NYSE: CUK) were down 6.7% and 5.3%.

So what

Carnival said on Monday evening that its new ship Mardi Gras would not enter service until February 6. He was originally scheduled to sail in November, but the coronavirus pandemic is forcing the company to change its plans. Carnival was therefore forced to cancel all scheduled departures of the ship until the end of January.

Cruise ship inventories sank on Tuesday as further travel delays were announced. Image source: Getty Images.

The cruise line is also delaying the completion of upgrades to its Carnival Radiance until spring, in part due to problems with COVID-19. This will result in additional trip cancellations.

Now what

COVID-19 makes life miserable for the main operators of cruise ships. The industry has been plagued by coronavirus epidemics and related shipping restrictions, which threaten to keep cruise ships stranded in port until the fall – and possibly much later.

Royal Caribbean and Norwegian Cruise Line Holdings recently formed a group of health experts to find a way to resume safe navigation, but it may not be enough. If an effective vaccine or treatment for COVID-19 is not found quickly, many people are likely to give up booking a cruise vacation for fear of getting sick. With little revenue, cruise lines are bleeding.

This makes stocks of Carnival, Royal Caribbean and Norwegian Cruise Line Holdings risky, at least until a medical solution to COVID-19 is discovered.



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