What Happened?
Shares of cruise vacation company Royal Caribbean (NYSE: RCL) fell 5% in the morning session after its peer Norwegian Cruise Line Holdings reported third-quarter revenue that fell short of expectations, sparking a sector-wide sell-off. Norwegian posted revenue of $2.94 billion, which missed analysts' forecasts of $3.02 billion. The news sent shares of Norwegian down, and rivals Royal Caribbean and Carnival Corp. also fell in sympathy. Adding to the concerns, Norwegian guided its fourth-quarter profit below expectations, citing weaker holiday demand and more cautious consumer spending due to persistent inflation. The results highlighted broader investor caution over pricing pressures, cost inflation, and a slowdown in booking momentum for the cruise industry.
The shares closed the day at $257.28, down 7.4% from previous close.
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What Is The Market Telling Us
Royal Caribbean’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 10.3% on the news that the company reported third-quarter results that missed revenue expectations and provided a disappointing profit forecast. While the cruise operator's adjusted earnings per share of $5.75 beat analyst estimates, its revenue of $5.14 billion fell slightly short of Wall Street's projections. Looking ahead, the outlook concerned investors as the company's earnings guidance for the next quarter also missed expectations. Although management slightly raised its full-year profit guidance, this was not enough to offset the revenue miss and the weaker near-term outlook, leading to a negative reaction from the market.
Royal Caribbean is up 13.1% since the beginning of the year, but at $259 per share, it is still trading 29.2% below its 52-week high of $365.84 from August 2025. Investors who bought $1,000 worth of Royal Caribbean’s shares 5 years ago would now be looking at an investment worth $4,545.
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