Please ensure Javascript is enabled for purposes of website accessibility

If You Invested $10,000 in Norwegian Cruise Line in January, Here's What Your Shares Are Worth Now

By Rich Smith - Aug 12, 2020 at 1:58PM

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

It's hard to make money when you can't set sail.

COVID-19 slammed into the U.S. economy like an iceberg, and crushed the cruise line industry like it was the Titanic.

As America shut down and sheltered in place in late March and for much of the second quarter, GDP plunged by as much as 32.9% and more than 40 million workers lost their jobs -- and for some companies, a one-third decline in their revenues would have been getting off easy. Norwegian Cruise Line Holdings (NCLH 1.77%) saw essentially its entire business disappear.

Cruise ship faces a partially submerged coronavirus

Image source: Getty Images.

After numerous outbreaks of COVID-19 hit cruise ships -- in some cases infecting hundreds of passengers on a given vessel -- the Centers for Disease Control and Prevention took action in March. To avoid the prospect of  thousands of passengers and crew, confined in relatively close quarters, spreading the novel coronavirus to one another -- and then sailing to new locales and spreading it further -- the U.S. instituted a "no sail" order forbidding cruise ships from starting new trips. Since then, it has repeatedly extended that ban.  

All major cruise lines remain under government orders to refrain from sending their ships out from U.S. ports through Sept. 30. And beyond that, the Cruise Lines International Association -- the industry's largest trade group -- last week extended its own voluntary moratorium until Oct. 31. Members of that association include Royal Caribbean, Carnival, and Norwegian Cruise Line.

The effect that is having on their finances is about what one would expect. Norwegian Cruise Line in particular revealed last week that its revenues in Q2 were even worse than anticipated, and that it is burning through $160 million in cash every month it remains confined to port. Management noted that it won't be able to meaningfully offset its cash burn before October -- if then.

Result: Norwegian Cruise Line Holdings stock that sold for nearly $59 at the beginning of this year closed barely above $15 Tuesday, and has lost 72.5% of its value. If on Jan. 1 you had invested $10,000 in Norwegian Cruise shares, then today, your paper losses on that investment are $7,250. Your shares are worth $2,750.

NCLH Chart

NCLH data by YCharts

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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

Norwegian Cruise Line Holdings Ltd. Stock Quote
Norwegian Cruise Line Holdings Ltd.
$13.21 (1.77%) $0.23

*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 08/07/2022.

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.