What happened 

Shares of cruise line stocks plunged double digits on Friday in a pullback from gains generated earlier this week. The industry has been on a roller-coaster ride since the COVID-19 pandemic started shutting down cruise ships in March and for now, investors are taking a pessimistic view. 

Carnival (NYSE:CCL) shares dropped as much as 13.6%, Royal Caribbean (NYSE:RCL) stock fell as much as 12.1%, and Norwegian Cruise Line (NYSE:NCLH) was down 16.5% early in trading. At 12:55 p.m. EDT, shares were down 11.5%, 10.1%, and 14.1% respectively. 

Cruise ship on the open water with a setting sun behind it.

Image source: Getty Images.

So what

There wasn't any big news out about the cruise line industry today. News reports have been covering the 100,000 crew members around the world who have been stuck on ships, but that's been going on for weeks. 

In an interview with Yahoo! Finance, Carnival CEO Arnold Donald said they were "fighting for the survival of the company." Donald highlighted that society isn't yet ready to continue large gatherings like cruises and there's no clear timetable for when that will happen. That's why the company has raised over $6 billion in liquidity to bolster its balance sheet to survive the crisis. 

What's really going on today is that the market overall has taken a turn south and cruise line stocks are just magnifying that move. As I'm writing, the S&P 500 is down 2.9% and the Nasdaq is down 3.4%, so there's growing pessimism in the market, and cruise line stocks are just an example of that pessimism. 

It seems that cruise line stocks pop one day and drop the next, depending on whether investors think the economy will open up quickly or whether they feel the COVID-19 pandemic is getting worse. Today's move is on the downside but next week it's just as likely that stocks will move higher like we saw earlier this week. 

Now what

It'll be months before we know anything about what the cruise line business will look like in 2021 or beyond. If COVID-19 can't be contained by fall, it's unlikely cruise ships will set sail. And if they do plan to, it's not clear if customers will be willing to use their discretionary funds for a potentially risky trip. 

What companies like Carnival can do is fall back on their current liquidity and make sure they can survive a crisis that lasts a year or more. Carnival has done that, and Royal Caribbean and Norwegian Cruise Line will need to assure investors they have liquidity when they report quarterly earnings next. 

Investors should look past the daily swings of cruise line stocks and consider the industry's long-term prospects. I can't see cruise lines being full of passengers for months or maybe even years, and at the end of the day, that's what's going to keep me out of cruise line stocks. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.