What Happened?
Shares of cruise company Norwegian Cruise Line (NYSE: NCLH) jumped 12.3% in the afternoon session after activist investor Elliott Management built a stake of more than 10% in the cruise operator and planned to push for changes at the company.
The investment firm, which became one of Norwegian's largest shareholders, sent a letter and a presentation to the company's board outlining its case. Elliott's materials pointed to what it called “strategic and execution missteps” that it believed led to a “profound undervaluation” of the cruise line, especially during a time of strong demand in the industry. The firm planned to push for a shake-up, which included nominating a director to the board. The market reacted positively to the news, as investors appeared hopeful that the activist involvement would force strategic changes and help the company improve its performance.
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What Is The Market Telling Us
Norwegian Cruise Line’s shares are very volatile and have had 27 moves greater than 5% over the last year. But moves this big are rare even for Norwegian Cruise Line and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 19 days ago when the stock gained 9.6% on the news that its peer, Royal Caribbean Cruises, reported strong full-year guidance, which lifted the entire cruise sector.
Royal Caribbean forecasted its full-year adjusted earnings per share to be between $17.70 and $18.10, a range that was stronger than analysts had expected. This optimistic outlook was supported by powerful demand for cruise vacations. The company noted that it had seen the seven highest booking weeks in its history and had already booked about two-thirds of its cruise capacity for the year at record rates. The strong performance and bright forecast from a major industry player created positive sentiment for the whole cruise line business, boosting shares of competitors like Norwegian.
Norwegian Cruise Line is up 6.3% since the beginning of the year, but at $24.22 per share, it is still trading 11% below its 52-week high of $27.20 from February 2025. Investors who bought $1,000 worth of Norwegian Cruise Line’s shares 5 years ago would now be looking at an investment worth $950.77.
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