What happened

On Monday, reports of an incredibly effective new coronavirus vaccine from Pfizer helped push cruise stocks out of port. By the time trading was done for the day, shares of Norwegian Cruise Line Holdings (NYSE:NCLH) stock were up nearly 27%, Royal Caribbean (NYSE:RCL) had gained nearly 29%, and Carnival Corporation (NYSE:CCL) had climbed more than 39% as investors bet that cruising will soon resume.

Today, however, cruise stocks are giving up those gains. A miserable earnings report from Norwegian Cruise Line, followed by an announcement that Carnival is cashing in on yesterday's stock surge with a $1.5 billion share offering, sent both stocks tumbling -- forming a whirlpool effect and sucking Royal Caribbean down alongside 'em. As of 10:40 a.m. EST, Carnival stock is down 11.5%, Norwegian 8.7%, and -- through no particular fault of its own -- Royal Caribbean is sinking 4.8%.

3 red arrows going down and crashing through the floor

Image source: Getty Images.

So what

Is that fair? Let's consider the facts.

With its ships still laid up in harbor and unable to cruise, Norwegian has essentially no revenue to offset its expenses and took in just $6.5 million last quarter versus $1.9 billion in the prior year's Q3. Inevitably, this resulted in a loss -- $2.50 per share. And unfortunately for Norwegian Cruise investors, that was a bigger loss than Wall Street analysts had predicted.

At Carnival, shares are falling for a different reason. Taking advantage of a stock price that will net it 39% more cash when shares are sold than it would have gotten on Friday, Carnival announced today that it will sell as much as $1.5 billion in stock. On the one hand, the extra cash will come in handy as Carnival waits out a period of preparation and conducts "simulated voyages" before receiving permission from the CDC to resume cruising. On the other hand, Carnival shareholders can expect to be diluted out of another 10% of their stake in the company while waiting for that to happen, and they're apparently not thrilled about that.

Now what

And of course, Royal Caribbean stock is going down too -- not down as much as its cruise-operating peers, to be sure. But you have to wonder: If Norwegian Cruise Line Holdings just reported a bigger-than-expected loss and Royal Caribbean is in similar straits, might that mean Royal Caribbean's next batch of earnings news will also be bad?

Not immediately, it won't. Royal Caribbean just reported earnings two weeks ago, after all, and another report won't roll around for another two and a half months, giving Royal Caribbean some time to right the ship before reporting again. But even if the company's shareholders dodge this particular bullet, what are the chances that Royal Caribbean will follow Carnival's lead and issue a big batch of shares to capitalize on yesterday's windfall?

That's a risk investors can't afford to ignore, and it might be why they're selling today -- to cash in on Monday's cruise stock rally before Royal Caribbean can. With approval of Pfizer's vaccine still weeks away, distribution months away, and sufficiently wide distribution to eliminate the virus perhaps still a year or more in the future, I can hardly say I blame them.