No Stimulus for Cruise Line Stocks Means They're Basically Lottery Tickets Right Now
The market breathed a big sigh of relief this week upon Senate passage of the new $2.2 trillion stimulus package on Wednesday night. The bill includes a $500 billion bailout fund for distressed businesses, with $75 billion earmarked for airlines, hotels, and other vital distressed companies, and $425 billion available for other large distressed businesses. That fund will be managed by the Federal Reserve and overseen by an inspector general and a bipartisan five-person commission appointed by Congress.
That's good news for many businesses that have been forced to shutter due to the lockdown in response to COVID-19. Still, industries that receive bailouts may run into issues with shareholder value, given that the new restrictions prevent companies from buying back stock as long as they are on government assistance and for an additional year thereafter. In addition, the government could take equity stakes in these companies, further diluting shareholders.
However, it appears the large cruise companies, which aren't incorporated in the U.S., may be left out of any federal aid whatsoever -- at least, unless they give even more concessions than others. That sets up a complicated outlook for cruise stock investors.
Source Fool.com
