Norwegian Cruise Line Holdings (NCLH -0.21%) stock ended 2019 on a high note, testing highs not seen in two years. The cruise ship operator entered 2020 riding a wave of opportunity, yet as the seriousness of COVID-19's impact in China grew, the cruise ship operator got that sinking feeling.
The World Health Organization mulled over whether to declare the coronavirus outbreak a global health emergency, leading investors to consider what that would mean for travel and tourism companies.
Image source: Getty Images.
They didn't have to wonder long. Norwegian announced it was canceling dozens of cruises and warned the coronavirus would sap profits from its financials, causing the cruise operator's stock to begin its descent. Within weeks Norwegian lost a third of its value, and by the time the WHO declared COVID-19 a global pandemic, the cruise line was down more than 66%.
A $10,000 investment placed in Norwegian Cruise Lines on Jan. 2 was suddenly sitting in Davy Jones' Locker, down 88% at its low point and worth less than $1,200. Ouch.
Lost at sea
Those investors who stayed the course, however, have recouped some of their losses and today would be sitting on $4,506, a decline of 55% from their original stake.
There is a distant hope on the horizon that with the advent of a vaccine Norwegian will actually start sailing on its extended delay date of April 1. While bookings are obviously below historical norms, there remains latent consumer demand: 70% of its bookings for 2021 are cash, not credits from previous cancellations, and 90% of those for 2022 are cash.
Still, there is a long way to go before an investment in Norwegian is above water again.
