Carnival and Norwegian faced troubled waters
The cruise line industry got hit hard amid the pandemic, and companies that didn’t have other business units to lessen the blow suffered steep valuation declines. Carnival and Norwegian got crushed this year, with the stocks coming in as the worst-performing and third-worst-performing S&P 500 stocks of 2020, respectively. The chart below tracks each company’s performance in the year.
Putting these precipitous declines in context is simple enough: Coronavirus-related concerns prompted both companies to temporarily suspend operations, and continued delays for resuming operations have resulted in Carnival and Norwegian sitting out much of the market’s recovery that took place following the record-setting crash in March.
Carnival and Norwegian are now scheduled to start sailing again in early March of 2021. However, the recent discovery of mutated strains of the coronavirus and new travel restrictions in the U.K. and other territories suggest additional delays could be on the table.
At some point, the world at large will move closer to a state of normalcy, which should in turn lead to better operating conditions for the cruise line industry. That could pave the way for a big rebound for Carnival, Norwegian, and other companies operating in the space. Investors simply can’t count on the timeline and extent of a potential recovery as sure things.