Cruise stocks soar 10% as reopening optimism lifts virus-slammed industries
by Ben Winck, Business Insider US
- Royal Caribbean, Carnival, and Norwegian Cruise Line all leaped at least 10% on Wednesday as hopes for a coronavirus vaccine and smooth reopening lifted sentiment around the ailing sector.
- The gains form a healthy streak for the companies, which all closed at least 12% higher on Tuesday.
- Cruise stocks were among the hardest hit by the coronavirus pandemic, as infamous outbreaks across vessels led analysts to fear a prolonged downturn for the travel subsector.
- Growing optimism around a near-term economic reopening has fueled strong upswings for travel and leisure stocks as investors look to capitalize on a return to past activity.
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Royal Caribbean, Carnival, and Norwegian Cruise Line Holdings all surged at least 10% on Wednesday as sectors hit hardest by the coronavirus and related lockdowns rally on reopening hopes.
The morning gains form a fruitful streak for the struggling industry. Royal Caribbean and Norwegian Cruises both leaped nearly 15% to kick off the shortened trading week, while Carnival ended Tuesday’s session up more than 12%.
Cruise stocks were among the first to face violent sell-offs as investors balked at infamous outbreaks across vessels. Major industry players were forced to cancel itineraries and have since revamped operations as travel businesses look to restart.
Royal Caribbean announced in a May 20 statement it shifted its suspension deadline to July 31, citing “ongoing global public health circumstances.” The company expects to return to service on August 1.
Travel and leisure companies have also traded higher on hopes for a coronavirus treatment or vaccine. Equities soared on positive news out of Moderna’s phase-one study last week and enjoyed a similar, albeit smaller, boost on Tuesday after Novavax announced its own drug had entered clinical trials. Travel stocks stand to benefit from a faster-than-expected vaccine rollout, as experts fear the lack of such a drug could keep consumer confidence from fully rebounding.
Until then, the three major cruise lines still have plenty of losses to reverse before turning positive for the year. Royal Caribbean sits down 59% year-to-date, while Norwegian Cruise Line is down about 70%. Carnival is down 65% through 2020. While all three firms gained through May, their heavy declines through February and March have only been partially retraced.
Royal Caribbean traded at $52.51 per share as of 10 a.m. ET Wednesday. Norwegian Cruises traded at $16.67, and Carnival traded at $16.95.
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