Please ensure Javascript is enabled for purposes of website accessibility

Why Royal Caribbean Stock Dropped 5% This Morning

By Rich Smith – Feb 28, 2020 at 1:38PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Admit it. You saw this one coming.

What happened

One of the very first stories we ran here at the Fool on the subject of the novel coronavirus was about cruise line operator Royal Caribbean International (RCL 2.19%) canceling eight cruises sailing out of China.

This morning, Royal Caribbean stock dropped nearly 5% on continued concerns about COVID-19, the disease caused by a member of the coronavirus family that has caused nearly 3,000 deaths to date.

Collage showing a cruise ship, a man in a face mask and a microbe

Image source: Getty Images.

So what

This morning, Bloomberg reported that two non-Royal Caribbean cruise liners in the Caribbean have been denied entry to local ports out of coronavirus concerns. 

One, the MS Braemar, which was just denied entry to the Dominican Republic, is owned by Norway-based Bonheur ASA. The other, MSC Meraviglia, owned by MSC Cruises, was turned away first from Jamaica and then the Cayman Islands before finally dropping anchor off Mexico to await test results.

But just because Royal Caribbean doesn't own these particular vessels, investors aren't confident Royal Caribbean's ships won't be the next to get turned away.

Now what

As Bloomberg points out, between Royal Caribbean, Carnival Corp, and Norwegian Cruise Lines, the U.S.-based cruise industry has lost $31 billion in market capitalization over just the past six weeks. The good news is that after initially falling on today's news, all three stocks are seeing a bit of a relief rally in early afternoon trading.

But based on this latest development in the Caribbean, I fear they still have further to fall.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Royal Caribbean Cruises Ltd. Stock Quote
Royal Caribbean Cruises Ltd.
$45.40 (2.19%) $0.97

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.