It's been a rough year for most Norwegian Cruise Line Holdings (NYSE:NCLH) investors. Shares of the third-largest cruise line operator head into the final three weeks of the year trading 55% lower than they were when it began, making it one of 2020's worst-performing large-cap stocks.

It's a different story for more recent investors. The stock has more than tripled since plunging into the icy depths of single digits in March during the initial pandemic-related sell-off. And the share price has been particularly buoyant since early November, when favorable news began to break from late-stage coronavirus vaccine trials. With a lot of questions heading into the new year, it's easy to wonder if Norwegian Cruise Line Holdings will continue to bounce back or if it will sink again in 2021. Let's walk up the gangplank to take a closer look at one of this year's wildest stocks.

A snorkeler with her googles raised by wearing a surgical mask makes an X with her arms on the beach.

Image source: Getty Images.

Bears now boarding

Let's start with some of the knocks on Norwegian Cruise Line Holdings stock. A lot of things have not changed for the company since mid-March, when its shares bottomed out just above $7 after it suspended all sailings. At the time, Norwegian Cruise Line -- like its larger peers Carnival (NYSE:CCL)(NYSE:CUK) and Royal Caribbean (NYSE:RCL) -- thought it might be boarding passengers again in as little as a couple of months. 

We're at the same place now in terms of canceled future sailings. Norwegian Cruise Line has nixed passenger voyages until the beginning of March. No one is surprised anymore by the steady cadence of cancellations, and if anything, the situation for the business has gotten worse. Across all three cruise lines, more customers are opting for cash refunds rather than enhanced credits for future cruises. 

Another major downside for Norwegian Cruise Line as an investment is that it has printed a lot more new shares and taken on a lot more debt. The company had a weighted average of 214.8 million fully diluted shares outstanding when the year began. Nine months later, that figure was at 271.2 million -- and rising. The dilution means that on a per-share basis, revenue and earnings will be a lot lower. 

Each of the cruise giants has also had to take on billions in new debt just to stay afloat through this crisis. Norwegian Cruise Line's total debt has exploded from $6 billion at the end of last year to $10.5 billion as of the end of the third quarter. Interest expense will naturally take a bigger bite out of eventual operating profits. The combination of frustrated passengers, stock dilution, and debt expansion is scary, but let's go over the positives. 

Bulls now boarding

The biggest difference for the company between now and nine months ago is that now, there's a light at the end of the tunnel. Vaccines against COVID-19 are rolling out, and while the process of inoculating  people will take time, it would be a shock if cruise lines aren't sailing again at some point in 2021. 

There's also less financial uncertainty with Norwegian Cruise Line. It has whittled down its monthly cash-burn rate to the point where it has enough liquidity to get through the lull and bankroll pending refund requests. 

The industry itself will emerge smarter and leaner. The cruise lines will be better equipped to handle future outbreaks. The global recession that was just starting to bubble to the surface earlier this year has a good chance of reversing itself in 2021. Even if consumer sentiment when it comes to cruising isn't favorable right now, don't underestimate what the pent-up demand for travel could do for the business once conditions are somewhat back to normal. 

In the end, I still believe that Norwegian Cruise Line stock will be vulnerable to a sell-off in the year ahead. Investors today aren't fully factoring in all of the negative implications of the last nine months of printing new shares and taking on more debt. The cruise industry will recover, but it will be a gradual process on the top line and a much longer road back on the bottom line. Norwegian Cruise Line also lacks the scale of Carnival and the higher margins of Royal Caribbean. Even if Norwegian Cruise Line sets sail again in 2021, that doesn't mean that the stock won't head lower. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.