Please ensure Javascript is enabled for purposes of website accessibility

Why Norwegian Cruise Line Stock Just Fell 6%

By Rich Smith – Updated Aug 26, 2020 at 3:07PM

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

Carnival sneezed, so will Norwegian catch a cold?

What happened

Shares of Norwegian Cruise Line Holdings (NCLH -1.43%) were down 6.2% on Wednesday as of 2:10 p.m. EDT. Although there doesn't seem to be any news concerning Norwegian that would account for the decline, there is some news about its rivals.

Collage showing a cruise ship, a man in a face mask and a microbe

Image source: Getty Images.

So what

Yesterday, Carnival (CCL -2.30%) and Royal Caribbean (RCL 0.08%) had news of the bad variety. Royal Caribbean got hit with an analyst warning that its losses in 2020 could be nearly triple what had been projected earlier, and 2021 losses could be more than three times worse than estimated.

Carnival first announced that the three luxury liners of its Cunard subsidiary would be canceling their 2020 sailings from Britain. Then, the company said its Princess Cruises subsidiary will also be canceling voyages, specifically the 2021 World Cruise and 2021 Circle South America trip on its Pacific Princess and Island Princess ships.

Now what

If you're wondering why bad news for Carnival and Royal Caribbean (both of whose stocks are down today as well) might result in a sell-off of Norwegian shares today, I fear it may be this:

In announcing its postponements, Carnival cited "restrictions and limitations with border and port access determined by government and health authorities and the continued uncertainty of airline travel." None of these are problems specific to Carnival; they can be expected to impact Norwegian (and Royal Caribbean) as well, and may foreshadow additional cruise cancellations and postponements by these companies as well.

So it makes perfect sense that all three major cruise line stocks are down today.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.