Cruise stocks drop, as there's more than just the Iran conflict to worry about

By Tomi Kilgore

Norwegian's sales miss and downbeat booking and profit outlooks spark concern about demand for cruises

Cruise stocks fall, amid worries about the Iran conflict and Norwegian's disappointing earnings report and outlook.

Shares of Norwegian Cruise Line Holdings and its peers were hit hard Monday, as investors worry the cruise and travel industries will be hurt by the Iran conflict.

But there's more to it than that. For an industry that has touted strong demand from consumers seeking experiences over things - as well as a strong appeal to cost-conscious consumers, given cruises are cheaper than land-based vacations - Norwegian's (NCLH) fourth-quarter results may spark some concern that the good times may have peaked.

The cruise operator missed sales expectations for the latest quarter and provided a downbeat outlook for both profit and bookings. With oil prices surging due to the Iran conflict, it could even be worse than the outlook, which included only a slight increase in fuel costs.

Crude oil futures spiked 6% on Monday, amid fears that the Iran conflict will lead to supply disruptions.

Norwegian's stock dropped 10.3%, enough to make it the S&P 500 index's SPX second-worst performer. That marked the second straight quarter that the stock dropped by more than a double-digit percentage after earnings.

Melius Research analyst Conor Cunningham said that while a "significant portion" of the stock's selloff is likely related to the Iran conflict, he believes the shortfall in results will be a catalyst for change at the company,

Among Norwegian's peers, shares of Carnival (CCL) fell 7.6% and Royal Caribbean's stock (RCL) slid 3.2%.

For the fourth quarter, Norwegian reported total revenue that rose 6.4% from a year ago to $2.24 billion, but that was below the average analyst estimate compiled by FactSet of $2.34 billion, with misses in both passenger ticket revenue and onboard spending.

That's the fourth straight quarter that revenue missed expectations, according to FactSet.

The company said it was "pressured" to start the year, during the so-called wave booking season - when cruise promotions peak during the first quarter - as it was "slightly below the optimal booking range." In the first quarter, it had to absorb a "material increase" in cruise supply in the Caribbean, the Norwegian said, which was by far its largest region.

The company said, however, that longer-term demand trends remained constructive, and particularly strong across its luxury offerings.

Adjusted earnings per share for the latest quarter, which excludes nonrecurring items, rose 46% to 28 cents, above the FactSet consensus of 26 cents. But for 2026, the company expects adjusted EPS of $2.38, or below expectations of $2.57.

That includes a 2026 outlook for fuel price per metric ton of $670, which is up 1.2% from $662 in 2025.

-Tomi Kilgore

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03-02-26 1712ET