Why Carnival, Royal Caribbean, and Norwegian Cruise Line Stock Sack Today

What happened

Shares of Carnival (NYSE: CCL) (NYSE: CUK) The cruise ship operator said it had lost about $ 3 billion in its fiscal third quarter. Royal Caribbean (NYSE: RCL) And Norwegian Cruise Line Holdings (NASDAQ: NCLH) Also fell about 5% on the news.

So what

With its ships stuck at the port due to COVID-related sailing restrictions, Carnival losses are quickly increasing. It incurred a net loss of $ 2.9 billion during the quarter ended August 31, including $ 937 million related to a reduction in the size of its fleet. Carnival now plans to dispose of 18 ships before returning 13 in July.

COVID-19 continues to compete the cruise ship industry. Image Source: Getty Image

To increase its cash reserves, Carnival will sell $ 1 billion in stock. The move will further dilute shareholders, many of whom have already suffered significant losses during the epidemic.

now what

Carnival said that the booking of its cruise ships for the second half of 2021 “occurred at the high end of the historic range.” However, it remains to be seen whether people will return to these ships – which are at risk of an outbreak of COVID-19 – if the coronovirus case count remains high in the following year.

More likely, cruise traffic will be well suppressed in 2021. Until a safe and effective vaccine or treatment for COVID-19 is developed and widely available, Carnival, Royal Caribbean and Norwegian Cruise Line holdings may continue to burn in large quantities. Capital of their shareholders.