To The Moon

Hey tiger 🐯 👋, here we go again another analysis on this weekend.

Point of View:

In my analysis, I will delve into ExxonMobil's Q3 2023 performance, examining both the financial and operational aspects. While this global energy giant has faced challenges in the current economic and energy landscape, its strategies for clean energy and resilience in the face of market fluctuations are noteworthy. This article aims to provide a comprehensive view of ExxonMobil's performance, considering its impact on investors.

Financial Analysis:

Energy Prices Impact Earnings

ExxonMobil reported Q3 2023 revenues of $88.57 billion, a 17% decrease year-over-year, falling short of market expectations. This revenue decline is not surprising, given the ongoing slump in crude oil prices throughout the year, which significantly affected overall income. Similar trends are observed among other major energy companies, such as Chevron, which reported its earnings simultaneously.

In terms of profitability, ExxonMobil's net profit in Q3 was $9.1 billion, a substantial drop from $19.7 billion in the same period last year and $7.9 billion in the previous quarter. Adjusted earnings per share stood at $2.27, down from $4.45 in the previous year and missing the expected $2.36 per share. The sharp decline in profitability can be attributed to the plummeting revenue and rising costs in downstream chemical processing.

Operational Analysis:

1. Declining Core Revenue: Energy Prices Plummet

ExxonMobil's core business revolves around the production of petroleum products, including crude oil and natural gas. However, the company's performance has been significantly impacted by the volatile international oil market. In 2022, geopolitical factors, including the Russia-Ukraine conflict, led to increased demand for U.S. fossil resources in Europe, resulting in historic profits.

Yet, the energy market has witnessed downward fluctuations this year. Factors such as global economic conditions and the pandemic have led to oversupply, causing oil prices to drop. Additionally, the pandemic's persistence and global supply chain disruptions have further exacerbated price volatility. This is reflected in ExxonMobil's upstream and energy product segments, which saw a massive profit decline in Q3.

2. Uncertainty in Future Energy Prices

Current energy prices remain high, but the future remains uncertain. While energy prices have rebounded recently with global economic recovery and improved pandemic conditions, the long-term outlook is still uncertain. Clean energy development and adjustments in the global energy structure may impact the future prices. Although clean energy might not have an immediate impact on traditional energy demand, it's expected to exert pressure on prices in the long run.

ExxonMobil's Response:

Despite the uncertain energy price outlook, ExxonMobil, as one of the world's largest energy companies, is well-equipped to adapt to market fluctuations. The company is actively optimizing production costs, expanding markets, and enhancing collaborations to ensure sustainable growth. ExxonMobil's ongoing investments in clean energy, including solar, wind, and hydropower, are a testament to its commitment to a more sustainable future. The company plans to invest $15 billion in green energy transformation within the next six years, aiming for net-zero carbon emissions by 2050.

Continuing the Drive for Clean Energy:

While ExxonMobil has reaped significant profits from traditional energy in recent years, it is also actively promoting the development of clean energy. The company has increased its investments in renewable energy, including solar, wind, and hydropower. These investments not only expand its business horizons but also contribute to the advancement and application of clean energy technologies.

In addition, ExxonMobil is engaging in collaborative projects with other companies, such as China National Energy Group, Saudi Aramco, and Mitsubishi in pursuit of cleaner energy. The path to sustainable energy development lies in diversification, efficiency, and smart integration. Clean energy is poised to become a vital component of the future energy structure, and ExxonMobil's dedication to its development and application will play a crucial role in optimizing the global energy landscape.

Technical Analysis:

ExxonMobil has seen record-breaking performance due to surging international oil and natural gas prices over the past couple of years. Although energy prices remain historically high, there has been a significant retracement from their peak. The future price trend remains uncertain, and it is not advisable to invest in ExxonMobil at this time.

Conclusion:

In summary, ExxonMobil's Q3 2023 performance has been lackluster, with both revenues and profits falling short of expectations. The decline can be attributed to plummeting international energy prices. The outlook for future energy prices remains uncertain, despite the company's strong historical performance. ExxonMobil's response to market challenges includes a proactive shift towards clean energy, significant investments in research and development, and collaborative efforts with global partners. However, given the current pessimistic energy price trends, I would not recommend buying the stock at this time.

Thank you for reading. 😊 

$Exxon Mobil(XOM)$ 

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