Shares of Norwegian Cruise Line Holdings (NCLH 5.26%) plunged 12% on Friday after it announced another massive stock sale. Fellow cruise-ship operators Royal Caribbean (RCL 4.79%) and Carnival (CCL 5.75%) (CUK 5.38%) also declined by 5% on the news.
Norwegian said it will sell roughly 47.6 million shares for $30 per share. It intends to use the approximately $1.4 billion in gross proceeds to buy back debt. The offering price was nearly 9% below the closing price of Norwegian's stock on Thursday.
Many shareholders apparently didn't appreciate the steep discount -- or the fact that their ownership of the company will be diluted -- and decided to sell their shares.
Royal Caribbean and Carnival fell in kind. The size and price of Norwegian's stock offering likely reminded investors that the major cruise lines are not out of the woods yet. With most of their ships still stuck at port due to coronavirus-related voyage postponements, Norwegian, Carnival, and Royal Caribbean are likely to continue to generate losses until the COVID-19 crisis subsides.
Promising vaccines from the likes of Pfizer, Moderna, and Johnson & Johnson could help to dramatically reduce COVID-19 case counts, which would make it easier for the cruise lines to resume full-scale sailing operations. But until that occurs, cruise-ship stocks remain risky investments.