Royal Caribbean Cruises (RCL) saw its stock price plummet by 5.36% in pre-market trading on Tuesday, as the cruise industry faces potential headwinds following disappointing news from a major competitor. The sharp decline comes amid growing concerns about the sector's ability to meet Wall Street's high expectations.

While Royal Caribbean itself has not released any company-specific news, the downturn appears to be linked to Norwegian Cruise Line Holdings' latest earnings report. Norwegian Cruise, a key player in the cruise industry, reported record revenue for the third quarter but fell short of analysts' expectations for the third consecutive quarter. This underperformance, coupled with lowered guidance for net yield, has sparked worries about the overall health of the cruise sector.

Investors seem to be reassessing the cruise industry's near-term prospects, with Royal Caribbean bearing the brunt of this sentiment shift. Despite strong demand and high occupancy rates reported by Norwegian Cruise, the market appears concerned about the industry's ability to meet increasingly high revenue expectations. This broader industry concern has likely contributed to Royal Caribbean's stock decline, as investors may be anticipating similar challenges for the company in the coming quarters.