What happened
Who would have thunk it? Abbott Laboratories‘ (NYSE: ABT) “fast, $ 5, 15-minute, easy-to-use COVID-19 test” is music to the ears of investors – and especially cruise stock investors.
This morning, pharmaceutical giant Abbott announced that the FDA has given emergency authorization to healthcare providers to use their new “fast, reliable, highly portable, and affordable” on-site test for the novel coronavirus. In just 15 minutes, the test can tell you if you have contracted the novel coronavirus – and deliver the results directly to your iPhone or Android phone.
Shares of Royal Caribbean Cruises (NYSE: RCL) shares are up 4.8% in response from 10:30 a.m. EDT. Carnival Corporation (NYSE: CCL) is up 5.7%, and Norwegian Cruise Line Holdings (NASDAQ: NCLH) shares gain 6.7%.
Cruise stocks are set up and rare to go. Image Source: Getty Images.
So what
Abbott says it could take 50 million of these tests a month, enough to cover the U.S. in about six or seven months with accurate diagnosis – and Abbott’s test revenue grows by $ 3 billion a year. But why is good news for Abbott great news for cruise shares?
Basically, the reasoning is this: People are afraid to go on cruises because they will not know if the person standing next to them on the corridor could be infected with COVID-19. That depresses demand for cruises.
Worse, though, fears that even one COVID-positive passenger on board a cruise ship may have banned the CDC from already sailing cruise ships from U.S. ports for the better part of this year.
Well what
But if there is a reliable test available for the coronavirus – a cheap, accurate, and above all rapid test – then much of that fear can go away. There is even the potential for the CDC’s no-sail order to go away, and for previously announced bans on cruise lines that do business to roll back, or at least not extend to the end of next month.
This, in a nutshell, is the reason why shares of Royal Caribbean, Carnival Corporation, and Norwegian Cruise Line are all going up today.
