Why Cruise Stocks Are Sinking Today

A leading Wall Street analyst has raised doubts over whether one of the largest cruise ship operators could survive another demand shock like a new pandemic wave. Investors are abandoning ship as a result. Shares of Carnival (NYSE: CCL) (NYSE: CUK) are down 15% on Wednesday morning, while shares of Norwegian Cruise Line Holdings (NYSE: NCLH) and Royal Caribbean Cruises (NYSE: RCL) are down 10% apiece.

The cruise lines were hit hard by the pandemic, and the recovery to date has been choppy. There is a lot of pent-up demand for vacation travel, but only so many consumers who are eager to spend a week in a confined space with thousands of other guests.

Morgan Stanley analyst Jamie Rollo is worried the industry could capsize should anything else go wrong. On Wednesday, the analyst cut his price target on Carnival to $7 from $13 following last week's "weak" second-quarter earnings report. Rollo forecasts a full-year EBITDA loss of $900 million by Carnival due to weakened pricing, lower-than-expected occupancies, and higher fuel costs.

Source Fool.com