For four long days, it seemed that cruise ship stocks could do no right, as shares of Carnival (CCL 0.11%), Royal Caribbean (RCL -1.46%), and Norwegian Cruise Line Holdings (NCLH -0.40%) fell steadily in price.
On Friday, however, something inexplicable happened. Investor sentiment toward the cruise industry turned around a bit. As of noon ET, shares of Carnival were up 4%, Norwegian Cruise was up 5%, and Royal Caribbean was up by 5.5%.
I wish I could tell you why, but the truth of the matter is that there's really no "good" news out that could be seen as helping to refloat these boats Friday -- no earnings announcements, no analyst upgrades, and no price targets getting raised, either.
Indeed, it would be more accurate to say that the news for the industry is only looking grimmer. As MarketWatch reported Friday, President Biden just gave a press conference in which he warned that unvaccinated Americans are facing a "winter of severe illness and death" as the omicron and delta COVID-19 variants surge -- and I'd bet good money that's not a phrase you'll find in any of those cruise lines' marketing brochures.
The omicron variant of COVID-19 is "here now, and it's spreading, and it's gonna increase," warned Biden. Similarly, the World Health Organization is sounding the alarm that based on all the data it's seeing, omicron is significantly more transmissible than delta, which itself looks to be more than twice as contagious as the original COVID-19 strain and earlier variants.
Omicron also has more ability to evade the immune response generated by currently available vaccines, and it's better at reinfecting folks who've survived earlier variants of coronavirus, too, says the WHO -- assertions that are supported by the case numbers. The New York Times reports that in the U.S., new COVID-19 cases are averaging 124,000 a day -- that's up 31% from two weeks ago. In short, we appear to be looking at a longer pandemic than many had hoped earlier this year. In that context, I cannot imagine why investors Friday would be feeling more upbeat about these three cruise line operators, which will need to get a lot more people to book trips so they can begin repaying the more than $67 billion in combined debt they racked up earlier in the pandemic.
Maybe investors are hoping that after all the recent negative headlines, the bad news for cruise lines has finally been fully baked into their stock prices. All I can say to that is: I hope they're right.
To get a better indication of whether they are right, tune in on Monday, when Carnival reports its fiscal Q4 2021 earnings.