The Stock of Carnival Plunges to a Four Month Low as Fears Over Israel-hamas Exposure Weigh on the Company

Among the three major cruise operators, Carnival Corp. has the least exposure to cruises involving Israel. However, despite this, its stock is experiencing significant declines, approaching a closing low not seen in four months.

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According to analysis by Wells Fargo's Daniel Politzer, the recent unexpected attack by Hamas on Israel over the weekend is having the most significant cruise-related impact on Royal Caribbean Group. This is primarily due to Royal Caribbean's 14 planned sailings scheduled from Israel through the end of the year. Norwegian Cruise Line Holdings is next in line, with 10 scheduled sailings impacted, followed by Carnival, which had six sailings affected.

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In terms of the first half of 2024, Royal Caribbean has 15 sailings from Israel scheduled, Norwegian has six, and Carnival has 10.

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Politzer also highlighted that there have been cancellations and itinerary modifications for several sailings to Israel this week across all three cruise operators. As a result, he anticipates potential pricing pressures in the fourth quarter and the first quarter.

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When considering cruise capacity, Politzer's analysis suggests that Norwegian Cruise will be the most affected, followed by Royal Caribbean, and then Carnival.

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As of the afternoon trading session, Carnival's stock had declined by 4.2%, indicating that it was heading towards its lowest closing price since June 5. This decline made Carnival one of the worst-performing stocks within the S&P 500 index for the day.

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Royal Caribbean's stock also saw a decrease of 2.7%, while Norwegian Cruise shares experienced a decline of 1.4%.

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Politzer specifically pointed out that Royal Caribbean's "Rhapsody of the Seas" and "Jewel of the Seas" cruise ships, as well as Carnival's "Seabourn Escape," are all homeported in Israel's Haifa port, which serves as the country's primary cruise port.

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While Politzer's analysis primarily focused on itineraries involving Israel, he acknowledged that ships sailing within the broader region are also likely to be impacted by the situation.

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