Among the significant cruise liner business warned investors it might go bankrupt.

What occurred

Cruise ship stocks sank on Tuesday after Norwegian Cruise Line Holdings( NYSE: NCLH) said it had “significant doubt about [its] capability to continue as a going concern.”

Since 3: 35 p.m. EDT, shares of Norwegian, Royal Caribbean( NYSE: RCL), and Carnival( NYSE: CCL) were down 22%, 10%, and 9%, respectively.

So what

It’s not easy being a cruise ship operator during a global pandemic These beleaguered cruise ship companies have been forced to turn to the financial obligation markets to raise cash in hopes of remaining afloat till their ships can resume sailing as soon as again.

A cruise ship sailing at night.

Cruise ship stocks fell dramatically on Tuesday, following an insolvency caution by Norwegian Cruise Line Holdings. Image source: Getty Images.

Now what

Even if Norwegian has the ability to obtain the money it needs, the coast is still far from clear. The rising variety of COVID-19 cases in the U.S. and other parts of the world are making it progressively likely that health organizations like the Centers for Illness Control and Avoidance (CDC) might extend sailing constraints for cruise ships. Worse still, even when these limitations are lifted, many individuals may choose to forego cruise liner travel due to fears of getting ill.

Therefore, in spite of their recent– and potentially future– capital raises, Norwegian, Royal Caribbean, and Carnival are likely to stay in a battle for survival. Unless a vaccine or reliable treatment for COVID-19 is developed quickly, personal bankruptcy might be an unfortunate possibility for one or more of the significant cruise ship operators.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

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Joe Tenebruso has no position in any of the stocks pointed out.

The Motley Fool suggests Carnival. The Motley Fool has a disclosure policy

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