What Happened?
Shares of cruise vacation company Royal Caribbean (NYSE: RCL)
fell 3.9% in the afternoon session after the company said it will buy half of Sandals and Beaches Resorts for about $3 billion. Royal Caribbean said the price is about 10 times forward EBITDA. Morgan Stanley has committed the debt to fund it. The company said the deal should close in early 2027, subject to approvals, and that it expects the stake to add to earnings next year.
Jason Liberty, chairman and chief executive, said in the release that Sandals is the next step for a vacation platform that already includes Royal Caribbean, Celebrity Cruises, and Silversea.
Adam Stewart, executive chairman of Sandals, will keep a leadership role. The company said a board led by Liberty and Stewart will govern the joint venture, and that current reservations, loyalty programs, and both resort and cruise operations continue as they are.
The cash and the debt come first. The earnings benefit the company is describing sits in next year, and closing is still early 2027. A half stake also leaves the Stewart family in the business. The open is the market treating that as a bill due now. What would support the stock is evidence, after closing, that resort growth shows up in Royal Caribbean’s results at something close to the 10 times EBITDA it is paying.
After the initial drop, the shares shed some of the losses and rose to $227.35, down 3.4% from the previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Royal Caribbean? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Royal Caribbean’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 5 months ago when the stock gained 10.4% on the news that the reopening of the Strait of Hormuz boosted the broader cruise line sector. The strait is a vital global shipping route, and its full reopening for passage removed a significant potential hurdle for cruise operators that depend on stable maritime conditions. The positive sentiment was shared across the industry, with companies like Royal Caribbean Group and Carnival Corporation seeing their shares rise.
Royal Caribbean is down 19.7% since the beginning of the year, and at $227.35 per share, it is trading 34.7% below its 52-week high of $348.03 from February 2026. Despite the year-to-date decline, investors who bought $1,000 worth of Royal Caribbean’s shares 5 years ago would now be looking at an investment worth $2,579.
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