Norwegian shares sink despite record quarter

Core Viewpoint - Norwegian Cruise Lines reported record earnings and guest satisfaction, yet the stock price declined, indicating a disconnect between financial performance and market expectations [1][2][3]. Financial Performance - The company achieved record revenue, EBITDA, and bookings in the third quarter, which are expected to positively impact 2026 results [3]. - EBITDA margins have expanded by 600 basis points over the last two years, with an expectation of an additional 200 basis points by 2026 [6]. Market Expectations - The market may have anticipated continued strong yield growth post-COVID, which is not sustainable; the company now expects low to mid-single-digit yield growth moving forward [5]. - The company is focusing on maintaining slow inflationary cost growth while enhancing guest satisfaction, which is expected to further expand margins [6]. Strategic Focus - Norwegian Cruise Lines is shifting its focus towards premium family travelers rather than budget-minded families, aiming to attract those who are financially stable and willing to spend more [10]. - The company operates three brands, with luxury brands performing well, while the NCL brand is targeting premium families [9][10]. Booking Trends - Occupancy rates for Q4 are projected to exceed levels from 2023 and 2024, indicating strong demand from families [11]. - Forward bookings for 2026 are robust, reflecting consumer interest in travel experiences and optimism about future travel plans [15].