What happened 

Shares of cruise stocks plunged again on Thursday as COVID-19 coronavirus fears continue to weigh on stocks. Norwegian Cruise Line Holdings (NCLH -4.62%)dropped as much as 11.4%, Carnival (CCL -4.08%) plunged 12%, and Royal Caribbean Cruises (RCL -4.55%) dropped as much as 14.7%. 

These three stocks have now lost more than a third of their value over the past month as it's become clear that the coronavirus is going to be a big drag on earnings in 2020. 

NCLH Chart

NCLH data by YCharts.

So what

The stock market overall was down on virus fears again today, and cruise line stocks were hurt broadly. But it may be more industry-specific concerns that will hurt the industry this year

Norwegian Cruise Line has modified its final payment to be due 90 days before the voyage versus the previous 120-day policy. It's also allowing customers to transfer reservations as long as the trip departs before June 30, 2020. MSC Cruises has allowed passengers to rebook cruises in the Mediterranean within a year. Windstar is allowing full cancellation up to 15 days before departure. This is on top of canceling cruises in Asia for the spring. 

As companies start to relax cancellation policies, there will be pressure on the entire industry to allow customers to delay or cancel bookings. That will likely mean the impact on cruise revenue in winter and spring will be bigger than previously expected. And companies may be in for a rough 2020 if the virus continues to spread. 

Cruise ship on the open water.

Image source: Getty Images.

Now what

Investors may be starting to see cruise companies as values in the long term, and I think the industry will eventually recover, but not for a while. The impact of COVID-19 is only now starting to hit company revenue, and there will be continued pressure as travel bookings overall slow down. 

There's no easy way for cruise companies to absorb the hit from an illness like this because they have high operating expenses. That means earnings will fall faster than revenue, and that's scary for investors. 

If cruise line operators continue to ease their cancellation policies, it may drive an earlier drop in revenue than investors were previously anticipating. In fact, I wouldn't be surprised to see first-quarter 2020 earnings warnings and guidance changes for the rest of the year. We're a long way from seeing the end of the coronavirus impact in the cruise business, and investors in cruise stocks should brace for a wild ride.