Why Cruise Line Stocks Keep Going Down
By Rich Smith Aug 22, 2022 at 12:12PM
Shares of Norwegian Cruise Line Holdings were down 5.6% on Friday afternoon while Royal Caribbean and Carnival were both down about 4%.
Cruise stocks have been under pressure for months as the industry grapples with a number of challenges, including the rising cost of fuel, the war in Ukraine, and the ongoing Covid-19 pandemic.
The most recent sell-off was triggered by a report from Bloomberg that said Carnival is considering a debt restructuring. The report sent shivers through the cruise industry, as it raised concerns about the financial health of the world's largest cruise operator.
Carnival has since denied that it is considering a debt restructuring, but the damage has been done. Investors are worried that the cruise industry is facing a perfect storm of challenges, and they are selling off their stocks accordingly.
The cruise industry has been hit hard by the Covid-19 pandemic. In 2020, the industry lost $77 billion in revenue. In 2021, the industry lost another $23 billion.
The war in Ukraine is also having a negative impact on the cruise industry. The war has caused fuel prices to soar, and it has also made it more difficult for cruise ships to operate in certain parts of the world.
The rising cost of fuel is another major challenge for the cruise industry. Fuel is the second-largest expense for cruise operators, after labor. The rising cost of fuel is eating into the profits of cruise operators, and it is making it more difficult for them to compete with other forms of travel.
The cruise industry is facing a number of challenges, and it is unclear when the industry will recover. Investors should be aware of the risks involved in investing in cruise stocks, and they should consider carefully before making any investment decisions.
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