Why Carnival, Norwegian Cruise, and Royal Caribbean Shares Sank Today

What happened

The delta variant of the coronavirus is spreading and making cruise line investors stomach-sick.

Monday at noon EDT, cruise lines are down in all areas:

So what

Barron calls the latest data on COVID-19 “grim” – bad enough to “shake investor confidence in a global recovery.” Globally, new coronavirus infections in the past two weeks have increased by 34%. In the United States, where many investors had started to hope that widely available vaccines would end the pandemic, infections rose 140% over the same period, and, Barron says, “The COVID summer wave is gaining momentum. “

According to the United States Centers for Disease Control and Prevention, the delta variant of COVID-19 is the main culprit, responsible for nearly 60% of all new infections reported.

As Barron’s points out, a resurgence of the pandemic threatens “supply chain disruptions and pandemic-related bottlenecks” in the economy, but the travel, tourism and leisure industries would appear particularly at risk, as they require large groups of people to congregate in small aluminum tubes in the air, in parks, on casino floors and on ships at sea from where it is not. there is no exit point.

Now what

All that being said, what I think is most it is to be noted today how little cruise stocks react to the news. Despite all the pessimism in the Delta Variant’s headlines, the fact that major cruise stocks are only counting their declines in low numbers suggests investors are keeping a cool head today.

Why could it be?

It’s true that the delta variant is worrying – Yale Medicine says it’s 50% more contagious than the previous alpha variant, which itself was 50% more contagious than the original SARS-CoV-19 virus. It is also more effective at infecting younger patients – about 2.5 times more effective at infecting those under 50. And yet, Yale points out that despite all the mutations, the original Pfizer The vaccine is still 96% effective in preventing disease severe enough to require hospitalization and 88% in preventing any kind of symptomatic coronavirus disease.

Considering that many of the ports of departure for Carnival, Royal Caribbean and Norwegian have a policy of requiring vaccination, the dangers of major epidemics aboard their ships might not be as frightening as it seems.