Why Royal Caribbean Stock Crashed 10% Today

In a surprise announcement this morning, cruise line company Royal Caribbean (NYSE: RCL) -- which just finished reporting better-than-expected (but still unprofitable) financial results last week, lifting its stock price -- is sinking fast on news that the company has decided to issue at least $900 million, and perhaps as much as $1 billion, in new debt.

As of 9:50 a.m. ET, Royal Caribbean stock is already down 9.6%, and its news is sinking peer cruise line companies Norwegian Cruise Line Holdings (NYSE: NCLH) and Carnival Corporation (NYSE: CCL) (NYSE: CUK) alongside it. Norwegian stock is down 4.2%, and Carnival is off 4.5%.

Just about a month ago, Carnival Corporation reported second-quarter earnings in which it warned that, contrary to analyst forecasts, it would not in fact earn a profit in the third quarter. As if to emphasize the point, three weeks later, Carnival announced it would raise between $1 billion and $1.15 billion in cash through a new stock offering to tide it over until profitability returns.

Source Fool.com