Please ensure Javascript is enabled for purposes of website accessibility

Carnival Suspending Princess Cruise Operations Due to Global Coronavirus Pandemic

By Jon Quast - Mar 12, 2020 at 8:48AM

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

A major source of revenue won't come in for the next two months, as Carnival looks to protect its customers and employees.

One day after the World Health Organization officially characterized COVID-19 as a pandemic, Carnival Corporation (CCL 12.44%) has voluntarily suspended global operations for its popular Princess Cruises. In an official statement from the company, it stated that all 18 cruise ships operating under the Princess name will not be departing for their scheduled cruises. The pause is effective immediately and will last until May 10 -- 60 days.

Investors didn't receive this surprise announcement well. The stock was paused in pre-market trading while the announcement was made, before opening the day down 18%.

Man stares at red stock chart in desperation.

Image source: Getty Images.

Sinking cruise-ship stocks

According to Carnival, over 50,000 people travel with Princess Cruises every day. The choice to voluntarily pause cruises is a decision with its passengers' and employees' well-being in mind. Even still, the news isn't likely to be well received by those who were planning on sailing the seas in the coming days. Attempting to not lose loyal customers, Carnival is offering to transfer passengers to future cruises, as well as provide future on-ship benefits.

A decision of this magnitude has yet to be made by competitors Royal Caribbean (RCL 15.78%) and Norwegian Cruise Line (NCLH 15.36%), but could be a sign of things to come. All consumer-discretionary stocks are subject to macro-economic cycles to some extent. But the overwhelming uncertainty currently facing the cruise industry specifically has sent each of these three stocks down at least 60% year to date. 

Recently Royal Caribbean made moves to boost its liquidity in the coming year. Considering that a major source of Carnival's revenue is now turned off, the company could make similar liquidity moves in the coming weeks.

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

Carnival Corporation Stock Quote
Carnival Corporation
CCL
$10.85 (12.44%) $1.20
Royal Caribbean Cruises Ltd. Stock Quote
Royal Caribbean Cruises Ltd.
RCL
$41.76 (15.78%) $5.69
Norwegian Cruise Line Holdings Ltd. Stock Quote
Norwegian Cruise Line Holdings Ltd.
NCLH
$13.22 (15.36%) $1.76

*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
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

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.