Hello,
I'm just a pre covid new hire from school, please help to understand even though our stock is doing good and its going up but still why this bad situation in XOM?
12 replies (most recent on top)
"Simple answer is the stock is tied to crude price, XOM is now reduced to a commodity company that lacks vision"
Beg to disagree. I remember hearing that we would be the Walmart of gas. Walk around your Walmart. Tell me who you see and how well paid they are. This is part of the plan.
Lol!!! Maximize your income by staying with this company?? You must be the village id--t.
I'd like to dissect your question to see if the premise is right (and then maybe you will see that the answer is obvious). Premise: THE STOCK IS DOING GOOD. Analysis: Is the stock still doing good? Depends on many things, but to name a few - holding duration. If you are a day trader, and have bought and sold XOM 3 times just in the duration of reading this comment then, well, maybe the stock did do "good". But you are an employee, so let's take that perspective. Let's assume a typical employee (from the good 'ol days) worked a 30 year career (many did more than that, 35, 40,......but let's just take 30). Take the example of someone who is mid-career, in this case, 15 years in.....That means our hypothetical employee is about 37 and started in 2006. Go back and look at the price of XOM stock 15 years ago. What was it? I'll tell you. On June 29, 2006 (15 years ago), XOM closed at $62 and change. What is it today? $63. Effectively the same price. That's due to all those great stock splits, right ?!? Nope. No splits. Care to do the math and figure out the rate of return of XOM based purely on stock price appreciation. Now what people will tell you is that RockTooth (me, the worldwide driller) forget to incorporate all the great dividends XOM paid in that time, and they would be right. XOM certainly paid a healthy dividend which, reinvested, does actually give you a decent return. But someone who started in 2006 didn't expect to only get dividends. They expected to get stock price appreciation too, since that is what XOM did for generations before. Now fast forward to today.....the employee who starts today - you. Of course nobody knows where XOM stock price will go in the future, but most would say you'd be dreaming to expect future returns to look anything like they did in the 1970s, 1980s, 1990s. So you are counting on your dividends for XOM stock in your 401k, or RSUs if you are fortunate enough to get them. And grandmas all over are counting on their dividends too, which is why senior management is hellhound to preserve the dividend. Now fast forward 15 more years into your future, newbie. What if they take the pension away, or dilute/cease retiree medical benefits, and so on. Then you are really counting on those dividends. (BTW - you won't lose a vested pension, but they can cease future pension if they want, and most XOM employees probably dont realize , since they are so high paid vs common person, that many people have a non-qualified pension component which has different legal protections). So we come full circle, and I hope you see that the SITUATION does mirror the (recent) long-term performance of the stock, our stock. So my help to you is, if you choose to stay, you would do well to make sure that almost none of the eggs in your basket have XOM stenciled on them. That's the nugget - diversify.
XOM made bad decisions that are catching up to them now. They wasted money and stopped caring about employees in their arrogance. It is no longer an ethical company and the quality of people hired is not what it was several years ago. Eventually it will probably be another revolving door.
Simple answer is the stock is tied to crude price, XOM is now reduced to a commodity company that lacks vision and tenacity to create competitive advantages. Staying the same for decades with no strategic vision, forcing activist investors like Engine No. 1 to challenge the status quo. Doubtful there will be meaningful changes with just 3 seats...
ExxonMobil stock price is down almost 40% from mid-2014. Dow booting us from the Dow JIA was not a short-sighted decision on their part.
The “lower for longer” business outlook of the last several years in the oil patch should apply to career expectations for most of us. That includes benefits, promotions and salary increases.
The relative change in stock price (i.e., what the most recent person sold a share for) has nothing to do with an employee's experience at a company. The two can be correlated but there is no causal connection. XOM is a good career, but future pay and benefits are likely lower now as there is an excess of qualified oil & gas engineers now and production will likely decline or stay flat. Supply and demand for labor determines its price, so, that is the direction of things. Its obviously not worth jumping ship unless you got a better offer (or, potentially, and equivalent offer in another industry).
Stock is not everything, you need to understand the financial statements of the company, learn to read the balance sheets, see how much debt we still have,etc.
Fundamentals are strong. Don't listen to the naysayers. It won't be the big money deal for employees it has been for past generations. However, if you want to work in Oil and Gas, EM will be a good Company going forward. If you just want to maximize your income consider your options. Think like a business man. It's all just business.
If you are a new hire strongly recommend you investigate other options.
Because this is a temporary price spike. Company is preparing for lower for longer. Our industry is dying. Have to be low cost provider if you want to ride it out as long as possible. Things won’t return to the glory days. Ever.
The stock price is going up because oil prices are going up. The lower stock price is based at least in Upstream on poor investment decisions for assets funded 8 to 10 years ago that have not achieved the ROI that was used to fund them due to higher oil or nat gas price assumptions and cost overruns. Also a number of our assets are very mature so they produce less oil but still require same CAF, OPEX and still a little CAPEX to run. So we just aren't making the money we used to make or ROI or ROCE.