Carnival Corporation (CCL) saw its shares plummet 5.56% during intraday trading on Tuesday, as investor sentiment in the cruise industry soured following Royal Caribbean's mixed earnings report. The sharp decline in Carnival's stock reflects broader concerns about the cruise sector's financial health and booking trends.

Royal Caribbean, a major competitor to Carnival, reported third-quarter results that beat profit expectations but fell short on revenue. Despite raising its full-year outlook, Royal Caribbean's stock dropped more than 9% in morning trading. The company's CEO, Jason Liberty, highlighted a "strong booked position," but investors appeared unconvinced, focusing instead on the revenue miss and lower-than-expected net yields. Royal Caribbean's fourth-quarter earnings guidance also came in below analyst estimates, further dampening investor enthusiasm.

The negative sentiment spread across the cruise industry, with Norwegian Cruise Line Holdings also experiencing a significant decline of about 5%. This sector-wide reaction suggests that investors are reassessing their outlook on cruise stocks, despite recent reports of strong cruise demand. The last-minute booking trend observed by Royal Caribbean may be raising concerns about the predictability of future revenues across the sector. Additionally, rising costs, as evidenced by Royal Caribbean's 4.3% increase in constant currency net cruise costs (excluding fuel), signal that persistent inflationary pressures could impact profitability throughout the industry, including Carnival.