The coronavirus delta variant is spreading, and it's making cruise line investors sick to their stomachs.
As of noon EDT Monday, cruise line stocks are down across the board:
- Royal Caribbean (NYSE:RCL) shares are down 2.6%.
- Norwegian Cruise Line Holdings (NYSE:NCLH) is off 3.6%.
- Carnival (NYSE:CCL) (NYSE:CUK) is down 4.4%.
Barron's terms the latest data on COVID-19 "grim" -- bad enough that it's "shaking investors' faith in a global recovery." Globally, new coronavirus infections over the past two weeks are up 34%. In the U.S., where many investors had begun to hope that widely available vaccinations were putting an end to the pandemic, infections are up 140% over the same period, and, Barron's says, "the summer COVID wave is gaining speed."
According to the U.S. Centers for Disease Control and Prevention, the COVID-19 delta variant is the prime culprit, responsible for nearly 60% of all new infections reported.
As Barron's points out, a full-force return of the pandemic threatens "supply chain disruptions and pandemic-related bottlenecks" across the economy, but the travel, tourism, and leisure industries would seem especially at risk, inasmuch as they require large groups of people to gather together in small aluminum tubes in the air, at parks, on casino floors, and on ships at sea from which there is no point of egress.
All that being said, what I think is most noteworthy today is how little cruise stocks are reacting to the news. For all the doom and gloom of the delta variant headlines, the fact that the major cruise stocks are counting their declines only in the low single digits suggests that investors are keeping cool heads today.
Why might that be?
It's true that the delta variant is worrisome -- Yale Medicine says it's 50% more contagious than the earlier alpha variant, which was itself 50% more contagious than the original SARS-CoV-19 virus. It's also more effective at infecting younger patients -- about 2.5 times more efficient at infecting those under age 50. And yet, Yale points out that despite all the mutations, the original Pfizer vaccine still remains 96% effective at preventing disease serious enough to require hospitalization, and 88% effective at preventing any sort of symptomatic coronavirus disease.
When you consider that many ports of departure for Carnival, Royal Caribbean, and Norwegian have made it their policy to require vaccination, the dangers of significant outbreaks onboard their ships might not be as scary as they seem.