Why Royal Caribbean Cruises (RCL) Shares Are Falling

Royal Caribbean Cruises Ltd RCL shares are trading lower by 2.2% to $173.60 during Monday’s session. Shares of cruise stocks are trading lower in sympathy with Carnival Corp CCL, which issued guidance below estimates.

What Happened: Royal Caribbean saw its stock decline on Monday following the release of Carnival’s third-quarter earnings, despite Carnival reporting better-than-expected results.

Carnival’s earnings report highlighted a strong quarter, with adjusted earnings per share of $1.27, surpassing analyst expectations of $1.16, and quarterly sales of $7.90 billion, up 15.2% year-over-year.

Despite these positive figures, the market's focus shifted to Carnival's weaker-than-expected fourth-quarter guidance, which raised concerns about the broader cruise industry, leading to declines in Royal Caribbean’s stock.

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Royal Caribbean, as one of the largest cruise operators in the world, often moves in tandem with its major competitors like Carnival. With Carnival projecting fourth-quarter adjusted earnings per share of just 5 cents—significantly below analyst estimates of $1.16—investors became wary of broader industry challenges heading into the traditionally slower winter season.

Carnival's cautious outlook for the coming quarter, despite solid bookings and liquidity, suggests that the cruise industry may face lingering pressures, including rising operating costs, fuel price volatility, and economic uncertainty that could weigh on profitability.

What Else: Royal Caribbean has been riding a wave of post-pandemic recovery, with demand for cruises rebounding sharply as consumers sought leisure travel after years of restrictions. The company, known for its luxury and innovative cruise offerings, such as the world's largest cruise ship, Icon of the Seas, has seen strong bookings and record demand for 2024 sailings.

However, the news from Carnival indicated that despite high occupancy levels and solid forward bookings, near-term earnings could be pressured by rising expenses, such as fuel costs and inflationary pressures on labor and supply chains.

Royal Caribbean’s stock has benefited from a booming travel industry, with many analysts expecting continued strength in consumer demand for cruises. However, the lower-than-expected earnings guidance from Carnival cast a shadow over these expectations, prompting fears that Royal Caribbean may also face margin compression in the final quarter of 2024.

Investors appear to be anticipating that similar cost challenges could affect Royal Caribbean’s upcoming earnings, given that both companies operate in the same competitive and cost-sensitive industry.

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How To Buy RCL Stock

Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.

For example, in Royal Caribbean Group’s case, it is in the Consumer Discretionary sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.

According to data from Benzinga Pro, RCL has a 52-week high of $184.41 and a 52-week low of $78.35.