Big Oil in Big Trouble: ExxonMobil, Oldest Member of the Dow 30, Ushered Out

The pandemic has pushed the oil industry into a position where it’s hemorrhaging money.  Recently we learned that ExxonMobil, a Dow component since 1928 (then Standard Oil), has left the DJIA, replaced by something of greater relevance to today’s world.

Exxon’s (ticker XOM) stock closed at just under $41/share today, off more than 60% from its all-time high about 10 years ago.  That hardly makes it a “buy” at this point, however, because the fundamentals are so poor:

• Doing things (working, shopping, etc.) online is going to increase in popularity even after we get COVID-19 under control.

• In the likely event that a Democratic administration comes to power in the U.S., regulations will go into effect that will make it tougher for Big Oil to continue to wreck this planet.

• The trend towards electric transportation is inexorable; no gas-/diesel-powered cars will be sold in the EU after 2030.

• Exxon is under criminal investigation for lying to shareholders re: what the company knew about climate change and what this would eventually do to the value of its assets.

• The prosecution of this case, regardless of its outcome, is going to take the company’s reputation from bad to abysmal.

Anyone who doesn’t sell XOM at $41 now is going to be crying in his beer in a year or so.