What Happened?
Shares of cruise company Norwegian Cruise Line (NYSE: NCLH) jumped 5% in the afternoon session after a federal appeals court blocked Hawaii from implementing a new climate change tax on cruise passengers.
The tax, referred to as a 'green fee,' was set to take effect on January 1 and would have added between 11% and 14% to the cost for passengers cruising in Hawaii. The ruling temporarily halted the law's enforcement while the appeals process continues. This decision came after the Cruise Lines International Association challenged the tax, arguing it violated the U.S. Constitution and federal laws. Adding to the positive news, the company's Oceania Cruises brand unveiled redesigned suite accommodations for its new Oceania Sonata ship, which is scheduled to debut in August 2027.
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What Is The Market Telling Us
Norwegian Cruise Line’s shares are very volatile and have had 22 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock dropped 3.8% on the news that a recent analyst downgrade and broader concerns about the cruise industry weighed on the stock.
The negative sentiment followed a recent rating change from Jefferies, which downgraded Norwegian Cruise Line from a "Strong Buy" to a "Hold" and lowered its price target from $26 to $20. This action signaled reduced confidence from the analyst. Adding to the pressure, competitor Carnival provided guidance that its revenue per passenger was expected to increase by 2.5%, a figure slightly below what the market had anticipated. While this still represented growth, it raised concerns among investors that an increase in the number of ships, particularly in the Caribbean, could weigh on future pricing. Broader fears about potential consumer weakness and fierce competition within the sector also contributed to the stock's decline.
Norwegian Cruise Line is up 4.4% since the beginning of the year, but at $23.79 per share, it is still trading 18.2% below its 52-week high of $29.07 from January 2025. Investors who bought $1,000 worth of Norwegian Cruise Line’s shares 5 years ago would now be looking at an investment worth $977.89.
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