TLDR
- Norwegian Cruise Line (NCLH) stock surged 12% in pre-market trading after Elliott Investment Management disclosed a 10% stake in the company
- Elliott plans a full turnaround and potential proxy fight, citing Norwegian’s underperformance compared to Royal Caribbean and Carnival
- The activist investor is eyeing Adam Goldstein, former Royal Caribbean president and COO, as a potential board nominee
- CEO Harry Sommer stepped down on February 13, replaced by former Subway CEO John Chidsey, causing shares to drop 7.6%
- Norwegian reaffirmed FY25 adjusted EBITDA guidance at $2.72 billion with a 37% operational margin despite recent management changes
Norwegian Cruise Line stock jumped nearly 12% in pre-market trading Tuesday after activist investor Elliott Investment Management disclosed a stake exceeding 10% in the struggling cruise operator. The Wall Street Journal reported Elliott plans to push for a complete turnaround at the company.
Norwegian Cruise Line Holdings Ltd., NCLH
The activist investor is preparing for a potential proxy fight. Elliott has publicly criticized Norwegian’s persistent underperformance compared to competitors Royal Caribbean and Carnival, both of which have recovered strongly from the pandemic downturn.
NCLH stock has fallen 3.7% year-to-date. Over the past year, shares have declined 21%, trailing the S&P 500 and trading near pandemic-era levels despite recovering consumer demand.
Norwegian operates as the fourth-largest cruise company globally. The company owns several premium cruise brands but has struggled to match the operational success of its rivals.
Elliott’s Turnaround Strategy
Elliott aims to improve both Norwegian’s financial performance and guest experience simultaneously. The firm pointed to Royal Caribbean as an example of successfully balancing these priorities.
The activist investor highlighted Norwegian’s underutilized assets. The company owns Great Stirrup Cay, one of the industry’s largest private islands in the Bahamas, but industry experts say its development has lagged behind competitors.
Elliott is tapping Adam Goldstein as a potential board nominee. Goldstein previously served as president and COO of Royal Caribbean, bringing direct competitive experience.
Shareholders have until next month to nominate director candidates. This deadline comes ahead of Norwegian’s annual meeting.
Leadership Shakeup Preceded Elliott’s Move
CEO Harry Sommer stepped down on February 13 with immediate effect. The sudden departure sent shares tumbling 7.6% the following day.
John Chidsey took over as CEO. The former Subway Restaurants chief executive previously served on Norwegian’s board from 2013 to 2022 and rejoined last year.
Norwegian reaffirmed its FY25 adjusted EBITDA guidance at $2.72 billion. The company also maintained its adjusted operational EBITDA margin target at 37%.
The cruise operator expects Q4 2025 Net Yield at the midpoint of its prior range. Core Q4 and full-year results are expected to match guidance issued on November 4.
Analyst Response
Two analysts downgraded NCLH stock to Hold from Buy following last week’s announcements. Two other analysts reduced their price targets on the stock.
Citi analysts led by James Hardiman expressed concern about the timing of the CEO change. “We can’t help but think that Norwegian’s CEO is unlikely to be ousted two weeks before the 4Q earnings announcement if 2026 trends were shaping up as planned,” they wrote.
The firm lowered its estimates for the fourth time in two months. Analysts are bracing for a potentially weaker outlook when Norwegian reports fourth-quarter earnings.
NCLH stock carries a Moderate Buy consensus rating on TipRanks based on six Buy and six Hold ratings. The average price target of $26.91 implies 25.2% upside potential from current levels.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
