Why Carnival and Other Cruise Line Stocks Sank Wednesday
Nothing good lasts forever, and on Wednesday morning, the rally in cruise stocks -- which bounced back broadly from last week's earnings-inspired sell-off -- came to an end.
As of 11 a.m. ET, shares of Norwegian Cruise Line Holdings (NYSE: NCLH) are already down 4.8%, followed by Royal Caribbean (NYSE: RCL) with a 5.1% loss. Carnival Corporation (NYSE: CCL) (NYSE: CUK) is leading the whole sector lower -- down 7.4%.
Why is this happening? Well, as I pointed out yesterday, there wasn't really any good news supporting this week's two-day rally in cruise stocks to begin with. And it's only been a few days since Carnival reported its big $0.65-per-share loss, which hardly seems enough time for that sting to fade away. If what investors saw Monday and Tuesday was no more than the symptoms of short-sellers closing their short positions by buying back stock, it makes sense that the rally would end sooner rather than later, and that cruise stocks would be sinking once again -- the more so when you consider the near-term prospects for this industry.
Source Fool.com
