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Why Norwegian Cruise Line Stock Popped 5% Today

By Rich Smith – Aug 10, 2021 at 3:29PM

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How long can Norwegian stock keep rising in the face of rising Covid-19 numbers?

What happened

Shares of Norwegian Cruise Line Holdings (NCLH -0.79%) were up a strong 5.3% at 2:55 p.m. EDT on Tuesday, but it's not entirely obvious why.

Yesterday, Federal District Court Judge Kathleen Williams granted Norwegian Cruise Line a preliminary injunction against a Florida law that proposes to fine businesses $5,000 for each instance in which they demand that a customer provide proof of vaccination against COVID-19, which Norwegian wants to do before allowing a passenger to board.

Arrow angles up on a green stock chart

Image source: Getty Images.

So what

On the one hand, yes, that sounds like something that would help Norwegian get back to cruising sooner (and more safely) by ensuring that no at-risk passengers board its ships and disrupt its return to cruising. On the other hand, Florida is already preparing to appeal the judge's ruling and begin levying the fines, which would throw a monkey wrench into Norwegian's plans if the state's appeal is successful.  

Meanwhile, and I'd argue more importantly, the delta variant of the coronavirus continues to run amok with more than 184,000 new cases reported throughout the U.S. just yesterday, and more than 28,000 in Florida alone.    

Now what

On the one hand (and yes, I know we've got a lot of hands waving around here), the trend of rising coronavirus cases should, in theory, bolster Norwegian's argument that it needs to be especially cautious in screening passengers before they board its vessels. On the other hand, though, the longer these numbers keep rising, the more they're resembling the kind of a fourth wave of coronavirus that could force the Centers for Disease Control and Prevention to suspend cruising entirely once again.

Investors bidding up Norwegian stock in hopes it's all smooth sailing after the judge's ruling Monday might be jumping the gun.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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