What happened 

Shares of cruise line stock Carnival Corporation (NYSE:CCL) fell as much as 3.1% in trading on Tuesday as investors started to sell some of the stimulus driven stocks. Shares hit their low early in the day but are still down 2.7% at 12:20 p.m. EST. 

So what

The drop looks fairly big today, but the reality is that investors are likely taking some profits from a bounce in shares that happened on Friday of last week. Cruise line stocks jumped across the board after clinical trial data showed that Pfizer's (NYSE:PFE) antiviral treatment reduced the risk of hospitalization or death by 89% for adults with COVID-19. 

Cruise ship sailing near a beach.

Image source: Getty Images.

A pill that can be taken after someone learns they have contracted COVID-19 would be another tool in fighting the pandemic, but alone it probably doesn't fundamentally change the way people will spend money or how comfortable they will be going on a cruise. 

Over the long term, the challenge is that Carnival's revenue is still well below pre-pandemic levels, it's burning cash, and even if it does get back to "normal," the company has tens of billions in new debt to eventually pay off. 

CCL Revenue (Quarterly) Chart

CCL Revenue (Quarterly) data by YCharts

That financial reality is sinking in after a bounce in shares on Friday. 

Now what

Carnival stock continues to be volatile because the future of the business is so uncertain. Customers seem to be coming back, and the company is expanding service, but it's a long way from making enough money to pay back enormous debts. Until we see a recovery, betting on the cruise line industry isn't something I'm ready to do. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.