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Why Royal Caribbean, Carnival, and Norwegian Cruise Line Stocks Surged Today

By Joe Tenebruso - Feb 22, 2021 at 5:42PM

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Long-term demand for cruises remains surprisingly strong.

What happened

Cruise ship stocks climbed on Monday as declining COVID-19 case counts gave investors hope that the beleaguered industry could begin to recover in the coming months.

By the close of trading, shares of Royal Caribbean (RCL 3.76%), Norwegian Cruise Line Holdings (NCLH 3.80%), and Carnival (CCL 3.63%) (CUK 3.50%) were up 9%, 6%, and 6%, respectively.

So what

With most of its ships stuck at port due to coronavirus-related sailing restrictions, Royal Caribbean suffered a net loss of $1.4 billion, or $6.09 per share, in the fourth quarter. For the full year, the cruise operator's losses amounted to $5.8 billion, or $27.05 per share. "These results reflect the staggering impact that the pandemic brought to our company and the whole industry during 2020," Chief Financial Officer Jason Liberty said in a press release. 

A cruise ship on the ocean.

Cruise ship stocks rallied on Monday. Image source: Getty Images.

Still, CEO Richard Fain is optimistic that Royal Caribbean has raised the cash it needs to weather the downturn until its fleet can resume full-scale operations. "We remain confident about the ability of our company to recover and return to the positive trajectory we were on previously," Fain said. "We are encouraged to see the sharp decline in cases and the growing availability of vaccines."

Moreover, Royal Caribbean said its bookings for the first half of 2022 are "within historical ranges and at higher prices," suggesting that demand for cruises could rebound sharply once the COVID-19 crisis subsides.

Now what

Royal Caribbean's bookings bode well for industry peers Carnival and Norwegian Cruise Line Holdings. And if promising vaccines from the likes of Pfizer and Moderna can help to bring about the end of the pandemic, the major cruise lines could see their businesses begin to recover sooner than many investors currently expect.

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Stocks Mentioned

Royal Caribbean Cruises Ltd. Stock Quote
Royal Caribbean Cruises Ltd.
RCL
$57.62 (3.76%) $2.09
Carnival Corporation Stock Quote
Carnival Corporation
CCL
$13.69 (3.63%) $0.48
Carnival Corporation Stock Quote
Carnival Corporation
CUK
$12.71 (3.50%) $0.43
Norwegian Cruise Line Holdings Ltd. Stock Quote
Norwegian Cruise Line Holdings Ltd.
NCLH
$15.97 (3.80%) $0.58

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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