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Is NCLH Stock a Solid Long Term Investment?

Stock Market

Investing in any type of stock can be a risky prospect, but it can also be one that pays great dividends. It all depends on what you decide to invest in, the amount of money that you put into the investment and the amount of time that you hang onto the stock before you sell it. If everything goes the way that you want it to, you'll buy something that doesn't cost very much and you’ll hold on to it long enough for it to start out performing the expectations of practically everyone, thereby allowing you to sell it for a massive payday. The thing is, it doesn't always go that way. In fact, you’d be a lot more correct in saying that things rarely go that way. Of course, some stocks carry more risk than others. Anyone that's ever invested in any tech stock knows this to be true. That said, tech stocks aren't the only ones that can be risky. Investing in a particular cruise line, for example, can prove just as risky because there are so many variables at play. Imagine considering the prospect of investing in Norwegian Cruise Lines, traded as NWCL, as a long-term investment. Is that something that would pay off or is it something that would only end up costing you money in the long run? The only thing that you can say with any level of certainty is that this is a loaded question and it requires a great deal of in-depth analysis.

Should You Invest in Any Cruise Line?

Some people scoff at the idea of investing in any cruise line, regardless of the company in question. There are many reasons for this. Even before the pandemic struck, cruise lines were notoriously unreliable. How many times have you heard something on the news where a particular cruise line ended up with a boat stuck in the water because something happened to it on a mechanical scale and it couldn't get back to port? Worse yet, you routinely hear stories where one of these ships has collided with another boat. If that's not enough to get your attention, think about all the times that you've heard on the nightly news that a boat was docked at a port somewhere, yet no one could disembark because there was some illness running rampant through the entire boat. Even before covid happened, this was a rather scary prospect. In the wake of the pandemic, it is something that people just don't want to deal with. Add into the mix the fact that all cruise lines were shut down for months on end and it's hard to understand why anyone would consider investing a significant amount of money in any of them right now because almost all of them are still in the rebuilding phase. Consider this fact. During the time when everything was shut down, Norwegian saw their shares tumble, just like everyone else. In fact, their shares went down by 74%. It's easy to write that off because everything was shut down and practically every business on the planet was losing money. That said, when you consider this fact with the knowledge that the cruise line industry has traditionally been rather unreliable as a money-making prospect to begin with, you might start to wonder whether or not you should even consider purchasing this stock or just leave it to someone else and let it become their problem.

What the Analysts are Saying

Oddly enough, there has been some research regarding different cruise lines and which one is the better investment. Almost every stock market analyst believes that Norwegian Cruise Lines is a superior investment between Royal Caribbean and other companies like it. However, that does not mean that they necessarily believe that you should be running out to buy several shares of the stock in order to hold on to it for a long-term investment. As a matter of fact, shares in the stock are still trying to recover from everything that occurred as a direct result of the pandemic. Even if you could wipe everything else clean, it's going to be a number of months before you can see with any level of clarity whether or not this particular stock is capable of performing the way that you would hope any long-term investment would be. Right now, purchasing this or virtually any other type of entertainment or hospitality stock involves a lot more wishful thinking than anything else. It's easy to want things to get back to normal. As such, it's relatively easy to pick a stock that had performed relatively well before the pandemic hit and automatically assume that it will be capable of performing well again. Unfortunately, that may not be the case. No matter how much any of us wants to deny it, the world that we all live in is a lot different now than it was a few years ago. Some companies have figured out a way to adapt and continue successful operations, even in the wake of it all. That doesn't mean that all of them are capable of doing this. What is interesting is that some of the interest in the stock for Norwegian Cruise Lines is directly tied to news about their covid-19 policies. If you want to know more, keep reading.

New Policies

Perhaps the thing that is really making everyone stand up and take notice of this particular stock is the fact that they announced that they will require everyone who sails with them to be fully vaccinated. In short, any person who cannot show undeniable proof of this will not be allowed to board one of their ships. It's important because there was a time when the government wouldn't allow people to board any cruise ship unless they could prove that they were fully vaccinated. However, those regulations ended on October 31st of 2021. After that, it became something of a roll of the dice for people boarding most cruise ships because there was no way to prove if they'd been vaccinated or not. Norwegian decided to take things a step further and insist that anyone sailing with them be fully vaccinated for the foreseeable future. That caused something of a ripple effect in the stock market. It's a bit of a double-edged sword because very small children can't be vaccinated and therefore cannot board the ships. On the other hand, anyone that's looking for a getaway without having to worry about whether or not the person sitting next to them has been vaccinated can book here without having that thought at the forefront of their mind the entire time. That got a lot of people excited and that excitement was reflected in the stock market, at least for a time.

The Numbers Tell the Story

You can look at news about a particular stock all day long, but when it really comes down to it, it's all about the numbers. If you want to know whether or not you should consider purchasing any stock as a long-term investment, all you have to do is look and see how that stock is performing. In this particular case, it is currently down by 5.26%. Despite that fact, the stock is still selling for $19.26 per share. That fact alone is probably enough to get your attention but in case it isn't, consider this one. Over the course of the last 10 days, the stock has fallen all but three of those days. As a matter of fact, it's lost 15.21% of its value during the last week and a half. That should be enough to make you pause and think twice before you purchase this stock as a long-term investment or as anything else. Things definitely get complicated here because a lot of stock market analysts believe that the stock is going to continue to tumble over the course of the next couple of weeks. You might be asking yourself why you would consider purchasing something as a long-term investment if it's been tumbling for the last week and a half and most analysts believe that it's going to continue that downward trend. After all, that's an understandable question. The reason that some people think that it might be a good long-term investment is because they believe that the price per share will tumble far enough that you can purchase it for a relatively low price and then hold on to that stock for six months or a year in order to make a lot more money than it's currently worth. Perhaps that is precisely the way that things will eventually go. The thing is, no one really knows that for sure. Things are still extremely volatile with regard to new covid variants, not to mention other world events which could preclude some people from choosing to travel. That fact alone has stock market analysts worried. In fact, they seem to fall into two distinctly different camps when it comes to believing that this is a good stock to be used as a long-term investment. Some think that it will pan out in the investors’ favor and is therefore a good option and others believe that you shouldn't touch the stock with a ten-foot pole. There doesn't seem to be a lot of middle ground about it one way or the other. The end result is that a lot of investors are left confused and wondering what they should do when it comes to this particular stock.

Can the Stock Afford to Take Another Blow?

Considering the fact that covid hasn't gone away yet and that it may never go away, you have to ask yourself whether or not this is a good option or one that is simply too risky for you to get involved with. As much as people want to say that life is eventually going to return to being exactly the way it was before the pandemic hit, it's highly likely that this is going to be something that people will have to learn to cope with for some time. No one knows how it will all play out in the future. As previously mentioned, you also have to take into consideration current world events and how that is going to impact people deciding to travel. Is it possible for this particular cruise line to take another financial blow due to circumstances that they really don't have any control over? No one really knows. At the moment, they're doing the exact same thing that a lot of other companies are doing. They're taking it day-by-day and trying to figure out each new step as they go. There's little question that some companies of this nature will survive but there is equally little doubt that some won't. Will Norwegian be the one that comes out on top? Right now, that remains to be seen.

Purchasing stocks as a long-term investment is an entirely different ball game than purchasing something that you can turn around quickly in order to make a profit. When you're using something as a long-term investment, the idea is to pay as little as possible for the stock right now and then watch it go up exponentially over a course of several months or even several years. There is a chance that this could potentially happen with Norwegian, but there's also a chance that it might not happen at all. Furthermore, you may be asking yourself whether or not it's worth it because there isn't any guarantee that the stock will go up enough to make it worth your while. As such, most people would agree that there are better options out there that can do a better job of making you money. This one is not the worst option that you could choose as a long-term investment, but it's not really the best choice out there, either. Of course, you have to decide for yourself what to do, but if you remember the fact that the end goal is to make as much money as possible, there are other options out there that don't rely so heavily on everything going in a particular manner. Perhaps you would be better off choosing something that is a bit less risky.

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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