Carnival Corp, Royal Caribbean Cruises and Norwegian Cruise Line Holdings have lost billions in equity value as a result of the coronavirus pandemic.
The cruise sector's "Big Three" majors have seen their shares drop by $53.6bn combined since 52-week highs as they face a perfect storm of virus-related headwinds that include voyage cancellations and ship quarantines amid onboard outbreaks.
On top of that, health officials are urging people to stay off cruiseships and Princess Cruises and Viking have suspended operations.
Arnold Donald-led Carnival's shares have fallen 61% from a 52-week high of $57.69 reached a year ago, resulting in a $21.4bn loss to equity value.
Richard Fain-led Royal Caribbean Cruises stock has dropped 62% from a high of $135.32 reached two months ago, making for a $21.6bn hit.
Frank Del Rio-led Norwegian Cruise Line Holdings stock has declined 73% from a one-year peak of $59.78 also reached two months ago, translating into a $10.6bn plummet in share value.
Further losses
The world's three largest cruise providers, which together cover almost 80% of the cruise market, saw more share losses on Wall Street through early afternoon Thursday.
Carnival's shares have fallen 16.8% to $18.10, while Royal Caribbean's stock has dropped 24.5% to $33.47.
Norwegian's stock has slid 24.8% to $11.27.
Negative outlook
SunTrust has lowered 2020 outlook for the "Big Three" cruise majors Carnival Corp, given the slew of headwinds.
The US investment bank has lowered Carnival's outlook to $2.73 from $4.45 earnings per share (EPS), Royal Caribbean's outlook to $6.18 from $10.40 and Norwegian's forecast to $3.15 from $4.51.
"We strongly believe this will not be the last time that estimates are changed up or down due to the fluid situation at hand," analyst Patrick Scholes wrote in a clients' note.
"Specifically, the uncertainty around Covid-19 has led some customers to postpone or cancel cruises and some companies to cancel sailings in various regions such as Asia Pacific and we have no reason to believe other regions will not be affected or the COVID-19 outbreak has been contained.
"2Q20 may likely be the worst quarter the industry has ever seen and 3Q may not be much better."
Some passengers may rebook
The cruise majors may recoup some of their losses, however, by offering a 125% refund that can be put toward future voyages, UBS analyst Robin Farley said.
"With such a generous incentive, we would expect many passengers would let their deposit ride," she wrote in a note to clients.
She also noted that all three companies have very strong balance sheets, especially that held by Carnival, which trades under ticker symbol CCL.
"For CCL, we note that liquidity includes $2.8bn undrawn on revolver and $3.6bn of export credit financing to cover the $3.6bn of new deliveries in 2020," she wrote.
"We note that CCL had the strongest balance sheet of the 3 cruise lines heading into 2020."
