Shares of Norwegian Cruise Line Holdings ( NCLH 2.30% ) rose 37.5% in November, according to data provided by S&P Global Market Intelligence. The waters were choppy during the month – the company received a mix of good and bad news. However, investors were bullish on developments in November, which led to gains that outpaced the market.
First the bad news: On November 9, Norwegian announced its “earnings” for the third quarter. It is probably more accurate to say that it posted losses in the third quarter. With cruises canceled, the company had almost no revenue, resulting in a loss of $677 million. Analysts were obviously expecting losses, but it was even worse than expected. Shortly after, the company issued new shares to address liquidity issues, sending the stock lower.
Now the good news for November: Pharmaceutical companies have announced effective phase 3 coronavirus vaccines. Cruise ships are considered particularly vulnerable to the spread of the coronavirus, which is why Norwegian and others have been docked. Mass vaccination could pave the way for smooth sailing. Indeed, some of the Norwegians recent reservation data indicate that people want to take a cruise; they just want to do it once they’re sure it’s safe.
Norwegian stocks and other cruises are attracting investors’ attention as a way to “play” a return to normalcy. The idea is that this stock can simply return to its pre-pandemic price per share as soon as the ships leave. However, it’s no longer the stock it once was, and a full recovery may already be on the cards, as Motley Fool contributor Billy Duberstein says. clearly explains.
That doesn’t mean Norwegian can never be a good investment. Investors will simply have to look beyond the coronavirus, and ask how long it will take Norwegian to fully recover and start building shareholder value in a post-pandemic world. It may be longer than you think.
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