Why Norwegian Cruise Lines Sailed In February, Only To Back Off Again In March

Shares of Norwegian Cruise Lines (NYSE: NCLH) rose 12.9% in February, according to data from S&P Global Market Intelligence.

The Norwegian received a boost last month after activist hedge fund Elliott Management disclosed that it owns about 10% of the company’s shares and published a presentation explaining how it could improve its results.

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Investors initially reacted positively to the prospect of the necessary changes; however, the stock has since returned to levels below where it started in February, following the release of fourth earnings last week and the outbreak of war in Iran.

On the bright side, this pullback may give investors another opportunity to buy this value stock at lower levels, while also giving Elliott more leverage to advocate for changes.

Norwegian has performed dismally well compared to other major cruise line stocks for years, but Elliott’s presentation says these are fixable problems, not structural problems. Specifically, Elliott pointed to years of executive mismanagement, exorbitant pay, party-related deals, and an independent board of directors as the culprits.

Perhaps anticipating an activist campaign, the Norwegian had already taken over as CEO just days before Elliott’s launch. The company has appointed board member John Chidsey as CEO, replacing outgoing CEO Harry Sommer, who has held the position since 2023.

However, Chidsey may get some pressure from Elliott as well. After all, Chidsey served on the Norwegian board of directors from 2013 to 2022, and again from 2025 onwards. Therefore, it is possible that Elliott was not interested in Chidsey’s appointment, as he was on the board at the time of the alleged mismanagement in Norway.

Still, investors initially cheered Elliott’s involvement in February. But when the company reported earnings on Monday of last week, the results and guidance weighed on the market, sending shares into retreat. Combined with the fallout from the conflict in Iran, stocks ended the week much lower than where they started in February.

To no one’s surprise, Elliott jumped on the Q4 results to press his approach to appointing new board members, issuing a statement shortly afterward, saying:

The disappointing Norwegian vision for 2026 significantly shrinks the Company’s capabilities. The comments on today’s earnings call reinforced a troubling pattern of obsolescence and poor strategy across the business that has been in the works for years. These persistent shortcomings underscore the urgent need to reform the Board to restore accountability, strengthen oversight, and rebuild investor confidence. Elliott is committed to ensuring that Norwegian has the independent, experienced, and fully engaged Board necessary to return the Company to industry-leading performance.

Investors should monitor how this situation evolves. If Elliott succeeds in replacing the rest of the board (and perhaps the CEO at some point), this could be a very risky, high-profile position to buy.

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Billy Duberstein and/or his clients have 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 policy of disclosure.

Why Norwegian Cruise Lines Expanded in February, Only to Reverse Again in March was originally published by The Motley Fool.