TLDR
- Norwegian Cruise Line (NCLH) stock rallied 12% in pre-market trading after Elliott Investment Management revealed a 10% stake
- Elliott is pushing for a complete turnaround and may launch a proxy fight to address underperformance versus Royal Caribbean and Carnival
- Former Royal Caribbean executive Adam Goldstein could join the board as Elliott’s nominee
- The activist move follows CEO Harry Sommer’s abrupt departure on February 13, which sent shares down 7.6%
- Norwegian maintained its FY25 adjusted EBITDA guidance at $2.72 billion despite the leadership change
Norwegian Cruise Line stock jumped nearly 12% in pre-market trading Tuesday after activist investor Elliott Investment Management disclosed a stake exceeding 10%. The Wall Street Journal reported Elliott is preparing for a potential proxy fight at the struggling cruise operator.
Norwegian Cruise Line Holdings Ltd., NCLH
Elliott has criticized Norwegian’s consistent underperformance compared to Royal Caribbean and Carnival. Both competitors have rebounded strongly since the pandemic, while NCLH stock continues trading near pandemic-era levels.
Shares have dropped 21% over the past year, trailing the S&P 500. Year-to-date, the stock is down 3.7% despite recovering consumer demand across the cruise industry.
Norwegian ranks as the fourth-largest cruise operator worldwide. The company operates several premium cruise brands but has failed to match the financial success of its main rivals.
Elliott’s Plans for Norwegian
Elliott wants to overhaul both Norwegian’s finances and guest experience. The firm pointed to Royal Caribbean as proof that cruise operators can excel at both simultaneously.
The activist investor is eyeing Adam Goldstein as a potential board nominee. Goldstein served as president and COO of Royal Caribbean, bringing valuable competitive insights.
Elliott also criticized Norwegian’s underdeveloped assets. The company owns Great Stirrup Cay in the Bahamas, one of the industry’s largest private islands, but experts say its development lags behind competitor destinations.
Shareholders can nominate director candidates until next month. The window closes ahead of Norwegian’s upcoming annual meeting.
CEO Departure Rattled Investors
Harry Sommer stepped down as CEO on February 13 with immediate effect. The surprise announcement sent shares plummeting 7.6% the next day.
John Chidsey replaced Sommer as chief executive. The former Subway Restaurants CEO previously served on Norwegian’s board from 2013 to 2022 before rejoining in 2025.
Norwegian reaffirmed its FY25 adjusted EBITDA guidance at $2.72 billion. The company maintained its adjusted operational EBITDA margin forecast at 37%.
Q4 2025 Net Yield is expected at the midpoint of the prior range. Core Q4 and full-year results should match the guidance provided on November 4.
Wall Street Turns Cautious
Two analysts downgraded NCLH stock to Hold from Buy after the CEO change. Two others trimmed their price targets on the shares.
Citi analysts led by James Hardiman questioned the timing of Sommer’s departure. “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 cut its estimates for the fourth time in two months. Analysts worry about a potentially weak 2026 outlook when Norwegian reports Q4 earnings.
NCLH stock holds a Moderate Buy consensus rating on TipRanks. Six analysts rate it Buy while six rate it Hold, with an average price target of $26.91 suggesting 25.2% upside.
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
