Cruise line stocks sold off again on Wednesday as some traders warned that the sector is becoming something of a bet on a recession. The negative vibe also includes worries that consumers will potentially delay laying out for a future cruise and the impact of higher fuel costs for cruise line operators.

There was also some negative commentary from Wall Street with Morgan Stanley slashing estimates on Carnival.

Analyst Jamie Rollo and team reduced the FY22 EBITDA forecast to -$900M from $900M, which would mark a third straight year of losses for the cruise line operator. There was also a warning on the leverage ratio, which MS thinks needs to come down to under 4X in FY23 to around $20B. That would likely require a capital raise of as much as $12B. Morgan Stanley cut its price target on Underweight-rated CCL to a Street-low of $7 and set a bear case PT of $0.

Norwegian Cruise Line Holdings (NYSE:NCLH) fell 9.48% to $11.55 vs. the 52-week trading range of $10.31 to $30.05.