This is fast becoming a tradition for investors focused on consumer discretionary spending: Buy shares of cruise line stocks over the weekend, because as surely as Monday follows Sunday, Monday morning will bring positive news of a new coronavirus vaccine, and cruise line stocks will go up.
The tradition began two Mondays ago, when Pfizer announced 90% effectiveness in its new coronavirus vaccine candidate. One Monday later, it was Moderna's turn to share good news. And today, right on schedule, here comes AstraZeneca with an announcement of anywhere from 62% to 90% effectiveness for its AZD1222 vaccine.
Cue the stock market rally: Norwegian Cruise Line Holdings (NYSE:NCLH) shares are up 4.8% as of 3:15 p.m. EST, and both Royal Caribbean (NYSE:RCL) and Carnival (NYSE:CCL) (NYSE:CUK) are up 5.3%. But is this the right reaction?
I'm not so sure it is. On one hand, yes, it is undeniably good news that we have one good vaccine available that doctors can soon use to begin vaccinating the populace against the SARS-CoV-19 coronavirus. And it's even better news that we now have three. The Centers for Disease Control and Prevention has given cruise lines the green light to begin preparing for the day when it's safe to resume cruising again.
But here's the thing: Over the weekend, CDC seemed to shift its light from green to red, raising its warning level against anyone resuming cruising from Level 3 to Level 4, indicating a "very high level of COVID-19" risk for cruisers.
Despite having already given the industry the go-ahead to get ready to start cruising again, the CDC says it "recommends that all people avoid travel on cruise ships, including river cruises, worldwide, because the risk of COVID-19 on cruise ships is very high. It is especially important that people with an increased risk of severe illness avoid travel on cruise ships, including river cruises."
Does this seem like a bit of mixed messaging to you? Because it sure does to me. It's almost as if the CDC's official advice to folks who want to go on cruises is: "Sure, go ahead and sign up for a cruise... if you dare."
From my perspective, the CDC's latest announcement kind of takes the wind out of the sails of anyone hoping that yet another vaccine candidate will revive the cruise industry anytime soon -- and it suggests the cruise industry could remain a risky place to invest for many more months to come.