Today’s stock exchange
|Percentage change (decrease)
|S & P 500
Data source: Yahoo! Finances.
Still, there were some really big losers on Tuesday, mostly in the travel industry. Share prices fell sharply, particularly among cruise line operators, as the hardest hit companies got worse news about their immediate prospects. Meanwhile, online travel giants like it in a broader sense Postings (NASDAQ: BKNG) and Expedia Group (NASDAQ: EXPE) not particularly good either. Below, we’ll take a closer look at the factors that hit these stocks.
Absorb more water
The losses in the cruise industry were substantial. royal caribbean (NYSE: RCL) The biggest drops were seen, falling 13% that day. Norwegian Cruise Line Holdings (NASDAQ: NCLH) and carnival (NYSE: CCL) both followed, down 8% on Tuesday.
Image source: Getty Images.
The industry has long been in trouble. In late September, the Centers for Disease Control and Prevention extended the no-sailing regulation for U.S. cruises by a month, and many believe the regulator would have preferred to go more aggressively with an extension until the first month of 2021.
Carnival got off to a bad start on Monday when it announced it would cancel its cruises in November. Royal Caribbean and Norwegian had already taken this step. Now that makes it a very real possibility that the industry will have no activity at all by the end of 2020.
The latest news of falling cruise stocks came from Royal Caribbean, which decided to cancel their cruises in Australia and New Zealand by the end of the year. Additionally, the company again turned to the capital markets for money, raising $ 1 billion on sales of $ 500 million in stocks and $ 500 million in three-year convertibles.
The investors were ready to keep cruise lines afloat and give them more money even with no prospect of a fresh start. How long this will take is unclear, but shareholders will have to lose patience with companies and their lack of certainty about the future.
Travel sites are faced with great uncertainty
Expedia and Booking Holdings each fell more than 3% in travel. The pain in the cruise industry was just one factor weighing on the online travel booking sites.
Airlines’ earnings were released today Delta Airlines (NYSE: DAL) had a lackluster performance that involved enormous losses. It is likely that the rest of the airlines will see similar problems.
To be fair, Booking and Expedia book more from hotels than airline tickets. But one follows the other, and while there have been some reports of travelers staying closer to home but still traveling far enough to need accommodation, recent financials from Expedia and Booking show strong pressure on hotel bookings.
In addition, Airbnb is aiming for an IPO in the near future. Health-conscious travelers feel more comfortable booking an entire house than if they deal with common hallways in hotels. This could pose a longer-term threat even after the COVID-19 pandemic ends.
Booking and Expedia have long been growth stocks, so the transition to a more defensive stance is tough for shareholders to swallow. However, until people are ready to travel again, the online travel portals may find it difficult to return to their former glory.
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