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Why cruise line stocks fell again on Monday

What happened

Cruise stocks had another difficult day on Monday as the market feared they would not emerge from the COVID 19 crisis. Carnival Corp. (NYSE: CCL) fell as early as 18.7% in early trade and fell 10.9% at 14.9 o’clock. SUMMERTIME. Royal Caribbean Cruises Ltd. (NYSE: RCL) was down 17.9% at noon and is now down 15.9%. Norwegian cruise line holdings (NYSE: NCLH) fell as much as 18.3% and is now down 12.2%.

Last week, cruise companies found they would not be eligible for the first round of economic funds, which made their turnaround considerably more difficult, and the news didn̵

7;t get better over the weekend.

Cruise ship anchored near a beach.

Image source: Getty Images.

so what

The weekend it was reported that a Holland America Line ship owned by Carnival had an outbreak of COVID-19. Four people died on board the ship and two others tested positive, with suspected symptoms of COVID-19-like symptoms. The ship was refused port in Panama and it is uncertain when sick crew members and passengers can disembark, although healthy passengers have been brought to the sister ship Rotterdam.

At the same time, Carnival announced that the trip would be suspended until May 15, a month longer than previously expected. Management also said the company will offer travelers booking a trip before the end of March 2022 a 125% credit on cancellations for future cruises.

The delay in reopening normal operations will not only make it difficult to weather this crisis, but the bad press about people signing COVID-19 on board cruise ships will make recovery difficult. Investors have to wonder what the demand for cruises will be this summer if there are ships in service by then. If such news continues, it is doubtful whether there will be a quick recovery.

What now

I recently wrote that it will be difficult for the carnival to survive the COVID-19 pandemic as the debt will be $ 1.8 billion in 2020 and $ 4.8 billion this year for new ships to be promised. Royal Caribbean and Norwegian Cruise Line are in similar positions, and prolonged closure can force all three companies to restructure.

At the end of the tunnel, there doesn’t seem to be much light for cruise companies without the need for a bailout. However, this seems unlikely since every company is registered outside of the United States and pays little US tax.

The news doesn’t seem to be getting any better for cruise stocks, and today could be the day of hope for a recovery after COVID-19 left the window. Investors should probably look elsewhere for top stocks in today’s market.

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