What happened

Carnival (NYSE:CCL) shareholders underperformed a historically weak market last month as the stock shed 23% compared to an 8% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.

The drop added to significant recent losses for the cruise ship giant on mounting fears that the coronavirus outbreak will severely affect its business in 2020.

A couple on a cruise holding champagne glasses and standing in front of a cruise ship

Image source: Getty Images.

So what

Vacation and travel stocks were all hit hard during the stock market slump last month, with cruise giants facing some of the biggest declines. Travel restrictions are in place in several countries, which will dampen demand for cruising itineraries. Carnival shares were also pressured by news that one of the company's Japan-based ships endured a widespread outbreak of the virus.

Now what

Carnival's shares have fallen enough that many investors see the potential for a rebound in a business that has shown strong resilience and cash-generating abilities through other downturns. Yet it isn't clear how this global outbreak will affect vacationers' assessment of the risks involved in taking cruises. Thus, investors might want to tread cautiously before ramping up their exposure to the highly discretionary cruise ship industry.

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