What happened
Shares of cruise ship giant Carnival (CCL +3.17%) stumbled on Thursday, falling 1.3%. They're down again Friday, 2% more. Add it up, and the two-day combined losses on Carnival stock come to 3.3% as of 12:50 p.m. ET.
And that's great news for Carnival investors.
Image source: Getty Images.
So what
Are you surprised to hear me say that? Don't be -- because the damage could have been a whole lot worse. Yesterday, in case you haven't heard, the Centers for Disease Control and Prevention (CDC) issued a stark warning to cruise customers, urging them to "avoid cruise travel, regardless of vaccination status."
Period.
No timeline was given for the warning, and no indication was given that it is temporary and will quickly expire. This was a blanket bit of advice, from the U.S. government's foremost COVID-19 authority direct to Carnival's customers: to cancel their cruises and not sign up for more.
As the CDC went on to explain, "increases in cases onboard cruise ships since identification of the omicron variant" prompted the warning. Evidence is mounting that "COVID-19 spreads easily between people in close quarters on board ships, and the chance of getting COVID-19 on cruise ships is very high, even if you are fully vaccinated and have received a COVID-19 vaccine booster dose." As a result, the CDC is very worried about the number of "outbreaks of COVID-19 [that have already] been reported on cruise ships" this month, and wants to nip this trend in the bud.
Now what
The fact that investors have only sold off Carnival stock by 3% or so in response to this news suggests that either (1) people aren't paying attention, or (2) they believe the CDC's warning is no big deal -- or both.
But with the CDC now estimating the risk of COVID-19 infection on board cruise ships as "very high" -- and indeed, the highest risk level on record -- there's a chance that the agency's next step might be to reinstitute the "no sail order" that nearly killed the cruise industry in 2019.
If that happens again, Carnival stock is going to go down, and by a whole lot more than just 3%.
