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Why Royal Caribbean, Carnival, and Norwegian Cruise Line Stocks Roared Back to Life This Morning

What happened

Who would've thunk it? Abbott Laboratories' (NYSE: ABT) "fast, $5, 15-minute, easy-to-use COVID-19 test" is music to stock investors' ears -- and cruise stock investors in particular are cheering.

This morning, pharmaceutical giant Abbott announced that the FDA has granted emergency use authorization for healthcare providers to use its new "rapid, reliable, highly portable, and affordable" on-site test for the novel coronavirus. In just 15 minutes, the test can tell you if you have contracted the novel coronavirus -- and deliver the results straight to your iPhone or Android phone.  

Shares of Royal Caribbean Cruises (NYSE: RCL) stock are up 4.8% in response as of 10:30 a.m. EDT. Carnival Corporation (NYSE: CCL) is up 5.7%, and Norwegian Cruise Line Holdings (NYSE: NCLH) shares are gaining 6.7%.

3 cruise liner ships lined up in port

Cruise stocks are lined up and raring to go. Image source: Getty Images.

So what

Abbott says it can churn out 50 million of these tests per month, enough to blanket the U.S. with accurate diagnoses in about six or seven months -- and grow Abbott's testing revenue by $3 billion a year. But why is good news for Abbott great news for cruise stocks?

Basically, the reasoning is this: People are afraid to go on cruises because they won't know if the person standing next to them on the gangway might be infected with COVID-19. That depresses demand for cruising.

Worse, though, fear that even one COVID-positive passenger might be aboard a cruise liner has had the CDC banning all sailings of cruise ships from U.S. ports for the better part of this year already.

Now what

But if there's a reliable test for the coronavirus available -- a cheap, accurate, and, above all, fast test -- then a lot of that fear may go away. There's even the potential for the CDC's no-sail order to go away, and for previously announced bans on cruise lines doing business to be rolled back, or at least not extended past the end of next month.

This, in a nutshell, is why Royal Caribbean, Carnival Corporation, and Norwegian Cruise Line stocks are all going up today.

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

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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