Cruise Stocks: Why CCL, RCL and NCLH Stocks Are on the Move Today

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Cruise stocks have been set adrift as the industry waits for clarity from the Centers for Disease Control and Prevention (CDC) on summer reopenings. Royal Caribbean (NYSE:RCL), Norwegian Cruise Line (NYSE:NCLH) and Carnival (NYSE:CCL) were all down in pre-market trading, with CCL stock off the most of the trio, down more than 2% at 6:30 am Eastern.

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Comments from CDC Director Dr. Rochelle Walensky on March 18 have industry watchers worried about the outlook for this summer and beyond, according to CruiseHive. When asked at a Senate hearing for clarification of the agency’s conditional sailing order, Walensky frustrated the panel with her answers that ultimately implied that the decision is not hers to make and rests with the U.S. Department of Transportation. Under that conditional order, cruises are blocked until Nov. 1, 2021, unless modified by the CDC director.

Last month, Canada extended its ban on cruises, pushing the docking of large passenger vessels in its harbors until March 1, 2022. The prohibition on cruise ships had been scheduled to lift March 1, 2021 after extensions in May and October.

Meanwhile, earlier this month, Royal Caribbean announced plans to set sail out of Israel for the first time this spring, with every passenger and crew member fully vaccinated. In the United Kingdom, the government said that domestic cruises would be able to resume on May 17.

CCL Stock Gains From Pandemic Lows

CCL stock hit a more-than-10-year low about a year ago, as the pandemic swept the U.S. Since that April 3, 2020 nadir, the stock price has regained its buoyancy, climbing 240%. RCL stock is up 272% and NCLH stock is up 251% in the same time period.

Last year, the revenue vacuum led the operators to raise cash with huge bond and stock issues. The so-called big three have told investors they have enough cash on hand to make it to the 2022 cruising season, The Wall Street Journal reported on Monday.

Carnival told investors last month that it expected to burn through an average of $600 million in cash a month just to keep ships maintained while keeping up with corporate operations and investing in prep work to set sail again some day.

In late February, cruise stocks rallied after investors saw some life in the sector as vaccinations gained momentum. Analysts saw pent-up demand for vacations and booking trends turned positive.

However, absent CDC direction, cruise lines can’t begin the long process of implementing safety measures and recalling thousands of workers from around the world, according to WSJ.

On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.

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