COVID-19 hit the US economy like an iceberg, destroying the cruise line industry as if it were the Titanic.
When America closed and sheltered at the end of March, and for much of the second quarter, GDP fell by as much as 32.9% and more than 40 million workers lost their jobs – and for some companies a third decline in their income would have been easily gone. Norwegian Cruise Line Holdings (NASDAQ: NCLH) saw essentially the whole company disappear.
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After numerous outbreaks of COVID-19 hit cruise ships – in some cases infecting hundreds of passengers on a particular ship – the Centers for Disease Control and Prevention took action in March. To avoid the prospect of thousands of passengers and crew, confined in relatively narrow quarters, the novel coronavirus spread each other – and then they sailed to new premises and spread it further – the US imposed a “no sail” order banning cruise ships from it. starting new journeys. Since then, the ban has been extended several times.
All major cruise lines remain under government mandate not to ship their ships from U.S. ports through Sept. 30. And furthermore, the Cruise Lines International Association – the largest trading group in the sector – last week extended its own voluntary moratorium until October 31. Members of that association include Royal Caribbean, Carnival, and Norwegian cruise line.
The effect it has on their finances is about what one would expect. Norwegian Cruise Line revealed last week that its revenue in Q2 was even lower than expected, and that it burns $ 160 million in cash each month that it remains confined to port. Management managed to offset its cash consumption for October – if that could not mean that.
Result: Norwegian Cruise Line Holdings, which sold for nearly $ 59 earlier this year, closed Tuesday just above $ 15 and lost 72.5% of its value. If you had invested $ 10,000 in Norwegian Cruise shares on January 1, your paper loss on that investment today is $ 7,250. Your shares are worth $ 2,750.
NCLH data by YCharts
