Cruise Stocks Plummet as Omicron Worries Grow

It’s not quite a repeat of March 2020, but the recent drop in cruise stocks certainly may remind some people of those days.

Over the past two years, cruise companies have been no stranger to volatile stock prices. Seemingly in the bullseye of industries impacted by the pandemic, shares of the major cruise companies like Royal Caribbean Group, Carnival Corporation and Norwegian Cruise Line Holdings all fell sharply back in March 2020 as the industry shut down.

Since then, however, the stocks have bounced back as the outlook surrounding COVID improved, vaccines rolled out, and ships returned to sailing.

Now, the cruise stocks are seeing another major drop in prices on the heels of new pandemic worries surrounding the rise of the Omicron variant. Seemingly overnight the variant burst into the public consciousness. In the days since, investors have sent the share prices of cruise line stocks plummeting.

Since the close of trading last Wednesday, shares of all three major cruise companies are down at least 18% in just four trading days:

These drops were capped off with falls of 7% for Carnival yesterday, along with 8% for Royal Caribbean Group and nearly 9% for Norwegian.

Concerns About Spread & Vaccine Effectiveness

While stock prices can move for any sort of reason, these sharp falls clearly show there is major concern about the spread of the new variant, which could have an impact on what has been a steady return of cruising around the world.

Little is known about Omicron, except that the mutations have put into question whether it is more transmissible than other forms of the virus and if it is able to evade immunity.

Obviously a virus that spreads more easily than current forms and is better able to beat vaccines would create a major headache for all of travel, including cruises. That’s why in addition to cruise stocks, shares of airlines and other travel companies have also declined.

Unlike other variants such as Delta, in this case many nations have already put in travel restrictions — especially for portions of Africa where the virus was first discovered. While the trend had been toward an opening up of borders for tourism and some return to normal, that has quickly reversed in recent days. For example, Israel has closed its borders to foreign tourists just one month after re-opening them.

Despite the travel restrictions in many places, cases of the variant continue to pop up globally, albeit in small numbers for now. This includes the first known case in the United States.

And while cruises require vaccines for the vast majority of passengers (if not all) and require negative tests before boarding, it’s not a stretch to think that they could come under pressure should Omicron become a larger issue.

For now, there is still much to be learned about the new variant and any potential impact it will have on cruises. Initial reports point to mild cases among vaccinated people, but the ability to spread quickly. That could change in the weeks ahead.

Judging from the action in cruise stocks, however, there is definite worry among many that Omicron could cause major hurdles in the return of sailing.

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