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Why Norwegian Cruise Line Stock Slumped Today

By Rich Smith - Apr 8, 2021 at 2:15PM

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It's been a good news, bad news kind of a week for the cruise industry.

What happened

Wednesday was a good day for cruise line stocks, with shares of Royal Caribbean (RCL 0.24%), Carnival Corporation (CCL -0.59%) (CUK -0.34%), and Norwegian Cruise Line Holdings (NCLH 0.35%) all closing higher despite bellwether stock Carnival reporting a big $2 billion generally accepted accounting principles (GAAP) loss for its fiscal first quarter 2021.

Today is a bit different, with all three of the major cruise line stocks moving lower, led by Norwegian Cruise, which dropped more than 6% in the morning and remains down 2.4% as of 1:30 p.m. EDT.

Paper boat reads NEWS.

Image source: Getty Images.

So what

Clearly, we're dealing with a good news/bad news situation here. On the good news front, Carnival CEO Arnold Donald noted that "booking volumes are accelerating" and reiterated his hope that the cruise industry will be able to "resume operations this summer." Furthermore, Bloomberg noted that the U.S. Centers for Disease Control and Prevention seems to be acceding to industry pressure to permit such a reopening and is now contemplating permitting cruising to resume "hopefully, by mid-summer with restricted revenue sailings."  

On the bad news front, though, yesterday Royal Caribbean and Carnival -- and Disney (DIS -1.59%), too -- all joined Norwegian Cruise in suspending most of their scheduled U.S. cruises through June.      

Now what

Translation: Cruising won't resume out of U.S. ports -- for anyone -- before July. But with the CDC now leaning toward potentially permitting "mid-summer" cruising, albeit at restricted levels, it does appear that 7/2021 -- July 7, 2021 -- might be the magic number for the industry.

And in furtherance of that goal, this morning we learned that Florida Governor Ron DeSantis has just filed a lawsuit "against the Biden Administration, the Centers for Disease Control and Prevention (CDC) and the Department of Health and Human Services (HHS)," reports, demanding that cruising be permitted to resume.

If that proves successful, today's stock market losses among cruise lines such as Norwegian could quickly turn into stock market gains.

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Stocks Mentioned

Norwegian Cruise Line Holdings Ltd. Stock Quote
Norwegian Cruise Line Holdings Ltd.
$16.28 (0.35%) $0.06
The Walt Disney Company Stock Quote
The Walt Disney Company
$105.62 (-1.59%) $-1.71
Carnival Corporation Stock Quote
Carnival Corporation
$14.20 (-0.59%) $0.09
Royal Caribbean Cruises Ltd. Stock Quote
Royal Caribbean Cruises Ltd.
$61.78 (0.24%) $0.15
Carnival Corporation Stock Quote
Carnival Corporation
$13.27 (-0.34%) $0.04

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

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