What happened
It's Thursday, the day after Hurricane Ian made landfall in Florida -- and cruise line stocks are hurting.
As of 10:30 a.m. ET, shares of Norwegian Cruise Line Holdings (NCLH +4.59%) have shed 4.7% of their value, Carnival Corporation (CCL +6.99%) is down 5.2%, and Royal Caribbean (RCL +7.34%) is leading the sector lower with a 5.5% loss.
NYSE: CCL
Key Data Points
So what
The hurricane is the obvious catalyst for today's sinking stocks. According to the Cruise Industry News website, multiple cruise lines -- including Carnival and Norwegian, as well as other lines such as Disney and MSC -- have canceled cruises ahead of Ian's arrival. On the plus side, Port Canaveral is expected to be back open for business as early as Friday -- but depending on the damage done to the region, that could change, and further cancelations or delays can't be ruled out.
Nor is Ian the only catalyst affecting cruise lines today.
As my fellow Fool Rick Munarriz pointed out on Tuesday, this week is the week that Carnival Corporation will report its Q3 2022 earnings -- on Friday, in fact. Rick struck an optimistic note in his report, pointing out how some analysts are predicting an end to Carnival's long string of losses, and that at least one analyst has raised his price target on the stock recently -- while even pessimistic analysts foresee Carnival losing a lot less money in Q3 2022 than it lost in each of the past four quarters.
But while good news is possible tomorrow, you also can't rule out the possibility of bad news -- or bad guidance.
Now what
According to the consensus of analysts tracking the stock, Carnival is still most likely to report a loss on Friday -- extending its losing streak to 11 straight quarters. Indeed, most analysts think Carnival will keep on losing money for three more quarters before it gets back to profitability, in Q3 2023. If Carnival confirms these fears with its guidance on Friday, that could upset a lot of apple carts -- not just for Carnival, but for investors in Royal Caribbean and Norwegian Cruise as well.
Consider: According to consensus estimates, Norwegian Cruise is expected to report a loss when it reports Q3 results on Nov. 1, but to turn profitable again three quarters later -- one quarter sooner than Carnival. And analysts think Royal Caribbean could actually report a profit next month for its Q3! If Carnival delivers better-than-expected news tomorrow, analysts could feel confirmed in their optimism, helping to lift the entire cruise sector higher. But if Carnival reports a loss -- or, even worse, warns that the losses will keep coming -- then the damage won't be limited to Carnival.
With cruise stock prices falling today, it appears this is the risk against which investors are battening down the hatches.
