Cruise stocks plunge after ship sinks

The timing of the Costa Concordia disaster could not be worse, as many cruises are booked at this time of year.

By Jonathan Berr Jan 17, 2012 11:10AM
image100/SuperStockShares of Carnival (CCL) and Royal Caribbean Cruises (RCL), two major cruise ship operators, plunged Tuesday as Italian authorities continued their probe of the sinking of the Costa Concordia. The timing of the disaster could not have been worse.

As Bloomberg News notes, about one-third of all cruise vacations are booked between January and March. Moreover, Europe accounts for about 38% of the revenue of Carnival, the corporate parent of Costa Concordia.

Early estimates peg the disaster's cost at $95 million, though insurers may be on the hook for as much as $800 million, according to Numis Securities. Shares of Carnival, which plummeted about 14% in early trading, may fall further.

Media reports have pointed out that the Miami company is attributing the disaster to "significant errors in judgment" made by Capt. Francesco Schettino. The captain has been detained on manslaughter and other charges. He reportedly has a history of disobeying orders. Those reports have also pointed out that the accident occurred before the ship's personnel conducted evacuation drills required by law.

USA Today pointed out that the $570 million ship, which was built in 2006, was damaged in an accident in 2008. And in 2010, three members of the crew were killed when another ship from the same line hit a pier in Sharm el-Sheikh, Egypt.

The Costa Concordia disaster is also hurting Royal Caribbean, the parent of Celebrity Cruises, Royal Caribbean International, Pullmantur, Azamara Cruises and CDF Croisières de France. Its shares are down more than 5% as investors are worried that the accident will cause travelers to have second thoughts about cruises.

Look for all lines to offer steep discounts in order to ease the frayed nerves of anxious travelers.

Jonathan Berr is a freelance business writer who is going on a cruise this summer.
Jan 17, 2012 2:26PM
I'm going to start looking for cruise deals now. Not only will the prices drop but responsible cruise lines will be extra vigilant now concerning safety issues.
Jan 17, 2012 1:32PM
What does Royal Caribbean have to do with this mess? I've had nothing but great experience with them. Carnival is another story. Worst experience ever.
Jan 17, 2012 2:28PM
Royal Caribbean has no business affiliation with Carnival Cruise lines whatsoever! Where did you get your information?
Jan 17, 2012 2:25PM
I have gone on 4 WONDERFUL Carnival Cruises, and I would love to go on another. I'm sure safety measures will tighten up after this mishap, and it won't happen again.
Jan 17, 2012 3:01PM
Capitan has history of disobeying orders?  Would seem the company reacting when a pattern was shown and firing him, or at least making him a subordinate on ship, would have saved a lot of loss....
Jan 17, 2012 2:45PM
I have cruised 15 times in the past 18 years and a cruise is the best vacation anyone can take.  I rank NCL #1, Royal Caribbian #2, and all others a distant #3.  They are all fantastic and safe.  You will always get some jacka-- that shouldn't be on the boat.  Go and enjoy.
Jan 17, 2012 4:14PM

Fixit man.. are you too dumb to see the heading is stock prices are dropping on CRUISE lines.. 


So to explain it too you.. RCL stock is down over 4% which is why it is part of the story. stock wise. 


Carnival is the parent company under which Costa runs their cruises..  not RCL ..

Jan 17, 2012 5:14PM
I have cruised twice.  Once in the North Atlantic and once in the Caribbean.  Both were on Princess which is operated by Carnival (not sure if they own or not).  Both times the safety drills were done within 1 or 2 hours of leaving port.  Not sure what this moron of a captain was thinking.

My wife and I love cruising and we will definitely do it again.  It is a very affordable vacation and is so relaxing.  We are both in our early 30's. 
Jan 17, 2012 5:16PM
If the man had a history of disobeying orders what th hell was he doing running a ship? Since Carnival apparently knew he disobeyed orders they should be hit for the max since they let him continue in his position.  If the fuel leaks out they could have an Exxon Valdez incident there.  that would really cost Carnival.
Jan 17, 2012 4:35PM
Island Deer Royal Caribbean is not the parent company of Carnival Cruise line. I have gone on 10 cruises since 1992 and if I had the money I would take a cruise each and every year. They are the most relaxing vacations that one can take, and the least expensive.
Jan 17, 2012 4:38PM
What does Royal Caribbean have to do with this mess? I've had nothing but great experience with them. Carnival is another story. Worst experience ever.

High profile disaster in any company can have impact in the sector.


Simply, this kind may lead to less people booking cruises at any company.




This is one of those things in terms of the stock than can create a buying opportunity. Emotional investor reaction may lead to over reaction. In the long view, in a world that "should" see a growing class of people who can afford cruises globally, I would look to pick up shares of one of the cruiselines if you can get in at the right price.

Jan 17, 2012 4:49PM
I have never been on a cruise, but I was thinking about it.  Not anymore since this accident happened.   I'll keep my feet on solid ground.
To ccinstlouis:


I heard that a plane crashed - better stay on the ground.


I heard that there was a car accident - best to not ride in cars.


I heard that someone's house caught on fire - you better not live in a house, it's not safe there.


I heard someone got hit by lightning - it's not safe to go outside anymore.


Don't even think about eating the food either - someone died from something they ate.


I guess the only thing you've got left to do is dig a hole in the ground, hide in there, and cower in fear because CLEARLY nothing is safe anymore.

Jan 17, 2012 5:49PM
Now is when the smart people will both buy stock in cruise lines and book their next cruise!

I have been on several cruises from various providers (Carnival, Disney and Holland America - so far); this accident DOES remind us that these ships aren't too big to sink, etc. - and maybe we should re-think the rules about allowing them to transport *anyone* BEFORE giving the mandatory safety briefing (instead of the current rule of within the first 24 hours of the cruise). 


Also - the current thought of going to one side or the other of a ship in case of emergency; most likely the ship is NOT going to stay up straight when/if it sinks or if there is a major disaster; not sure that having the emergency liferafts ONLY on the two sides (and not the front/back) is the wisest thing either; in the case of this ship, it listed to one side - effectively cutting the # of rescue boats to 1/2...thank goodness they WERE so close to an isalnd that people could opt to swim to shore (altho it was VERY cold).


I am going to cruise - but I'm also going to make sure I take the time to make myself aware of my surroundings, emergency exit routes, etc. and NOT rely exclusively on the crew - who are often overworked, underpaid, etc. - and (not surprisingly) often only looking out for their own well being in times of crises!

Jan 17, 2012 6:30PM

My wife and i are going on our 4th Caribbean cruise starting on Friday.Despite the tragic events of the past few days on board the stricken liner,we are waiting with child-like excitement for our holiday to begin.We are both just a couple of years away from our 60th birthdays.Unfortunately we need to travel to the airport by car travelling along a British motorway.Where I ask ,do you consider the greatest danger to lie?.Our thoughts and sympathies for all the casualties and their families.

Mar 29, 2012 1:09PM
What are these people talking about? 1500 immigrants adrift in the Med during the Libya conflict, many of them in plain view of NATO ships were not resqued. They were left to die of exposure, hunger and thirst. Why wasn't that headline news. I just read about it in The Guardian. These folks are clueless.
Jan 17, 2012 2:44PM
I have never been on a cruise, but I was thinking about it.  Not anymore since this accident happened.   I'll keep my feet on solid ground.
Jan 17, 2012 1:44PM
My family and I just finished a Western Carribean cruise Jan 1 on the Carnival Legends. I've also taken an Alaskan cruise on Norwegian Cruise Lines several years back. I know one thing: I will never cruise again. Up until this disaster, I was considering joining some friends on a Mediterranean cruise but I have since abandoned that idea. I think that ships are safe and there are redundant safety measures in place; however, some of the safety measures are being ignored or not taken seriously. As an example, during the emergency drill at the beginning of our recent Western Caribbean cruise, we were required to report to our muster stations. While there, emergency and evacuation procedures were supposed to be given over the pa system. The pa system was hardly intelligible; hardly anyone was listening and people were talking. On top of that there was no one there to make people be quiet and listen.  I guess people assume nothing is going to happen. I assumed the same thing, after all, it is a big ship and the officers and crew are supposed to know what they are doing. I am not assuming that anymore.
Jan 17, 2012 2:18PM

Re: Fixitman62

Royal Caribbean is the parent company to Carnival Cruise Lines


Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124 rated 1
266 rated 2
452 rated 3
702 rated 4
671 rated 5
604 rated 6
640 rated 7
495 rated 8
267 rated 9
158 rated 10

Top Picks




Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.