In early June, Carnival (CCL) headed to nearly $32. American Airlines (AAL) looked like it would continue its uptrend. Yet by the end of last month, both stocks erased their gains. What happened and why are they dipping badly?
Full vaccination rates among the developed countries slowed the Covid-19 pandemic. Death rates fell and hospitalizations decreased. Yet the delta Covid-19 variant and others remain major risks to the tourism industry. The world is in a race to achieve full vaccination before variants dominate. From there, the virus may still mutate.
So far, Pfizer (PFE), BioNTech (BNTX), and Moderna (MRNA) demonstrated a strong immune response to the variants.
Markets would rather not take that risk. The Centers for Disease Control may limit cruise ship departures. By Fall, Covid-19 may dominate during the flu season again. That would force ships to cut their travel schedule or limit capacity.
Value investors who missed the monster rally earlier this year may watch the sector. The downtrend in shares of CCL stock, American Airlines, Southwest, and Royal Caribbean (RCL) may end abruptly. Those who buy them at the bottom will get rewarded for taking the risk.
