What’s Next For Royal Caribbean Stock Amid Renewed Covid Fears?

What’s Next For Royal Caribbean Stock Amid Renewed Covid Fears?

Royal Caribbean stock (NYSE: RCL), the second-largest cruise line operator, has declined by about 12% over the last week (five trading days), compared to the broader S&P 500, which has declined by about 2. 6% over the same period. The sell-off follows the discovery of a highly mutated and apparently more transmissible new strain of the novel coronavirus, dubbed Omicron, which is prompting fears of renewed lockdowns and travel restrictions. The virus could pose a higher risk of re-infection compared to the Delta variant of the virus, which is currently the dominant strain worldwide, and it's also not yet clear whether the current crop of Covid-19 vaccines will be as effective against the variant. If this virus strain drives another Covid wave or shows signs of evading vaccines, it could prove to be a meaningful headwind for Royal Caribbean RCL and the broader cruising industry, which is only slowly getting back to normalcy after over a year of being essentially shut. That said, RCL stock still remains down by almost 50% from its pre-Covid highs and down by about 2% year-to-date, meaning that the risk is probably priced in. Now, is RCL stock set to decline further or will it