Tuesday, February 16, 2016

3 Reasons ExxonMobil's Stock Could Fall Further


Feb 16, 2016 at 3:30PM 
 
Any more weakness from oil prices, a decline in industry-wide downstream margins, and a shrinking cash cushion could all significantly impact share prices at ExxonMobil.


Xom Beaufort Sea Corporate Website
Image source: ExxonMobil corporate website.

It's been a long, long time since the oil and gas industry has faced such a severe downturn. To see the stress these companies are under right now, you need only look at ExxonMobil (NYSE:XOM). For decades, ExxonMobil has been the stoic oil and gas company investing through the cycle with incredible consistency. Yet on the company's most recent conference call, we actually heard it talk about investing more conservatively in this down cycle. 

Shares of ExxonMobil are down 22% from their highs in 2014. While there are reasons to think ExxonMobil is one of the best in the business and a great investment in a down market, there are still reasons ExxonMobil's stock could fall even more than it already has. Here are three reasons shares could fall further and what it investors should do about it. 

Continued low oil price environment

This one is a real no-brainer, but it's definitely worth keeping in mind at all times. As an integrated oil and gas company, ExxonMobil and its peers have assets throughout the entire value chain of oil and gas. In a commodity market, this means when one part of the business does well, it's typically at the expense of the other. MORE