Carnival Corporation stock was trading at $51.90 on January 15th, 2020, today it is at $14.60. Royal Caribbean Ltd. was trading at 135.05 on January 13th, 2020, today it is at $61.79. Norwegian Cruise Line Holdings was trading at $59.65 on January 13th, 2020, today it is at $17.10.
This begs the question, should you be investing in Cruise Line stocks? Or, should you stay far away from these stocks until some clarity comes on the No-Sail-Order? We look at what causes the cruise lines to rise and fall and when the right moment would be to get in or out.
Cruise Line Stocks are Up and Down Continuously
Cruise line stock value comes from the trust investors, and stockholders have in the industry’s capability to return on investments. It is safe to say that these investments have been fluctuating quite a bit lately.
The market has reacted very strongly to any news that comes out of the industry, the CDC, and new infection waves. In the last two weeks, the three major cruise companies (Carnival, RCL & NCL) lost 10%. This comes in combination with the increase in infections in Europe and the U.S.
On the other hand, the lines have all showed increasing stock prices when the booking numbers were released by Royal Caribbean last week for 2021. If the trend of positive bookings continues, we’ll see a positive trend in the stock prices.
Cruise Lines Fans Are A Good Indication
There are specific indications in the cruise industry that will tell you the general atmosphere amongst the guests. Right now, the atmosphere amongst many U.S.-based guests and equally in Europe and the U.K, is still positive, which is reflected in booking numbers.
The problem with looking at booking numbers is that these are released months after they happened. If you would like to buy stocks after good numbers have been released, then the price will already have gone up.
People are keen to get back on board, and a large portion doesn’t care whether they have to deal with COVID-19 measures or not. A simple look on cruise blogs, Facebook fan groups, and websites will tell you that people will sail no matter what, probably not at previous numbers just yet, but ships will be able to sail. The situation will be back to normal fairly soon once the measures are relaxed.
Because this is what it is all about at the end of the day. If the ships sail full, the cruise lines make money; stocks go up.
To Buy Or Not To Buy, That’s The Question
We won’t go as far as giving you buying advice on stocks. However, keep the following points in mind:
- The CDC will be giving a directive on the No Sail Order on October 30th at the latest. A further extension will keep stocks low, an end to the order, and sailing with measures in place will increase the stock price.
- The cruise industry is incredibly volatile right now. Small changes have a significant effect on stock prices, positive or negative.
- Carnival Cruise is not in a great position; a combination of the pandemic and severe allegations against the company regarding compliance issues plays havoc with the stock price. However, it has also dramatically improved its fleet’s efficiency by offloading older, less cost-efficient ships.
- Cruise line stocks are an excellent long term investment in a COVID free world.
- No-one knows when the cruise industry will be going back to normal. The low prices right now are a great incentive if you can afford to wait for the stocks to go up.
- Most, if not all, significant players on the financial markets rate cruise lines as undervalued right now; this means that they expect the cruise lines to go up again.
The last point is a good reason why you should take cruise stocks seriously right now. An investment of $1000 in Carnival Stock would give you 68 carnival stocks. If hypothetically, the stock price should go back up to previous levels, your stocks would be worth in the region of $3500. And that is what we would call an excellent return, or it would pay for a nice cruise.