What happened
Cruise stocks fell on Monday following news of major sporting event cancellations. At the close of trading, the shares of Norwegian Cruise Line Holdings (NASDAQ: NCLH) and Royal Caribbean (NYSE: RCL) they fell 7.1% and 3%, respectively. The two actions of the carnival, Carnival Corporation (NYSE: CCL) and Carnival Plc (NYSE: CUK), also decreased by more than 7%.
And that
Major League Baseball (MLB) postponed some games after several Miami Marlins players signed COVID-19. The outbreak occurred despite the many precautions MLB is taking to protect players, and even when stadiums lacked fans. The news casts doubt on whether the major sports leagues will be able to continue their seasons, and suggest problems for the short-term future of industries that rely on large gatherings of people.
If Major League Baseball cannot protect its players, how will the cruise industry protect its customers? Image source: Getty Images.
The cruise industry has touted its collaboration with health experts as it attempts to safely resume navigation operations. Major cruise operators want to assure clients that improved cleaning regimes and new social distancing measures will be enough to keep them safe. But recent MLB issues with player safety amid the COVID-19 crisis suggest otherwise.
Now what
If Carnival, Royal Caribbean, and Norwegian cannot safely resume navigation operations during the coronavirus crisis, then they essentially become a gamble on when an effective vaccine or treatment for COVID-19 will be developed, and become widely available. If you own these shares, you are essentially betting that these developments will occur before Carnival, Royal Caribbean, and Norwegian run out of cash. With uncertain vaccine development timelines at best, these cruise stocks remain risky bets.
