One of the significant cruise liner business warned financiers it may go bankrupt.

What took place

Cruise liner stocks sank on Tuesday after Norwegian Cruise Line Holdings( NYSE: NCLH) stated it had “significant doubt about [its] ability to continue as a going issue.”

As of 3: 35 p.m. EDT, shares of Norwegian, Royal Caribbean( NYSE: RCL), and Carnival( NYSE: CCL) were down 22%, 10%, and 9%, respectively.

So what

It’s not easy being a cruise ship operator during a global pandemic These beleaguered cruise ship companies have actually been forced to turn to the financial obligation markets to raise money in hopes of remaining afloat until their ships can resume sailing when again.

A cruise ship sailing at night.

Cruise ship stocks fell sharply on Tuesday, following an insolvency warning by Norwegian Cruise Line Holdings. Image source: Getty Images.

Now what

Even if Norwegian is able to get the cash it needs, the coast is still far from clear. The rising number of COVID-19 cases in the U.S. and other parts of the world are making it progressively likely that health companies like the Centers for Disease Control and Avoidance (CDC) may extend sailing limitations for cruise ships. Even worse still, even when these limitations are raised, lots of people may select to forego cruise liner travel due to fears of getting sick.

Hence, despite their recent– and potentially future– capital raises, Norwegian, Royal Caribbean, and Carnival are likely to remain in a battle for survival. Unless a vaccine or effective treatment for COVID-19 is established soon, insolvency could be a regrettable possibility for several of the significant cruise ship operators.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

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Joe Tenebruso has no position in any of the stocks pointed out.

The Motley Fool suggests Carnival. The Motley Fool has a disclosure policy

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Marco Bitran
Husband and father of two children under age 5, Marco also enjoys walks in nature, squash, running road races, and photography. He regularly contributes significant time and resources to the Combined Jewish Philanthropies, the MSPCA and other animal rights organizations, and the Bitran Charitable Foundation. Marco has also volunteered and consulted for public housing support organizations such as the Somerville Homeless Coalition, created by the local community’s grassroots response to the social crisis of homelessness.