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Why Royal Caribbean Stock Sank 10% in August

Demitrios Kalogeropoulos, The Motley Fool

What happened

Royal Caribbean (NYSE: RCL) investors trailed the market last month as their stock lost 10% compared to a 2% decrease in the S&P 500, according to data provided by S&P Global Market Intelligence.

The drop just erased a portion of the stock's gain, though, and Royal Caribbean remains slightly higher so far in 2019.

A couple smiling while sipping champagne in front of a docked cruise ship.

Image source: Getty Images.

So what

August's decline may have involved short-term selling following the cruise giant's solid fiscal second-quarter results. That report was highlighted by robust sales growth across its key vacation geographies in Europe, the Caribbean, and Asia. Yet the slump likely had more to do with impending Hurricane Dorian, which has pounded the Bahamas in recent days. Royal Caribbean counts that nation as a key destination, and it is the location of its new private resort island excursion, called Perfect Day.

Now what

Investors will likely learn about the scope of the hurricane devastation to that property in the coming days. But their bigger concerns involve the sustainability of consumer discretionary demand in the wider Caribbean in general, given the region's pounding in each of the last few hurricane seasons.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com