Connect with us

BenzingaEditorial

The Oil Crisis Can Harm US Economy But Not Like COVID-19

Published

on

oil industry stocks

As oil prices turned negative recently, many climate activists argued that oil is practically begging to be left in the ground. But the Trump administration has the industry’s back and will certainly not let it die. And if we put the green initiative aside, the oil and gas industry in the US alone carries 10.3 million jobs and contributes 8 percent to the country’s GDP. This is most certainly not like  50 percent which is the case with Saudi Arabia, but it is big enough to impact the economy.

Glimpse of good news amid the turmoil

About 10 days ago, oil prices turned positive after Saudi Arabia’s energy minister said the kingdom aims to provide additional voluntary cuts in an effort to support global markets, somewhat easing the tension which was exploding amid the Russia-Saudi conflict.

But keep in mind that global oil demand has plummeted by about 30% as the coronavirus pandemic curtailed movement across the world, building up inventories globally.

V, U or L-shaped recovery?

Goldman Sachs said earlier this week, as quoted by Business Insider, that oil demand is about to start recovering fast as in a V-shaped manner but it won’t recover fully. Supply is expected with an L-shaped recovery due to less business travel resulting in significant long-term demand in jet fuel demand. Then there is the fact that shutting in oil wells does damage making it difficult to recover, along with a sharp decline in capital expenditure and limited access to capital as investors won’t hear anything about oil.

Moreover, Goldman analysts warned that supply might never reach pre-crisis levels. As for the more optimistic forecast for demand, this full recovery isn’t expected before the third quarter of 2022 so buckle up folks! The industry is bound to take a beating as Warren Buffett’s Berkshire Hathaway sold its stakes in the “big four” airlines in April for a reason.

Even the mightiest have fallen

The debate regarding the government stepping in to help is that even with the aid, only the superstars such as ExxonMobil (NYSE:XOM) will be able to make it through. But even the big oil giant was not spared by tumbling prices and oversupply as its shares crashed more than 50% over the last five years. And let’s not forget it almost doubled its debt to $44 billion to make it through the last oil price downturn between 2014 and 2017, not too long ago and this has put a question mark on its ‘conservative’ management that was the most common way of doing things. ExxonMobil is still poised to outspend its big peers with a total 2020 capital budget of $23 billion, modestly ahead of Royal Dutch Shell (NYSE:RDS-B)’s $20 billion with Chevron (NYSE:CVX) and BP p.l.c (NYSE:BP) quite modestly below with $14 billion and $12 billion respectively.

The oil crisis Vs COVID-19 – no contest

In all fairness, the harm that the oil turmoil could do the US economy is not that serious when looked against the backdrop of the global slump caused by the pandemic. COVID-19 is expected to result in an even worse blow both to US’ GDP as well as to the global economy than the Great Recession. And its effect will be felt by literally everyone, no exceptions. The only way forward is looking at China, considering that both US and Europe perfectly imitated its way down so most likely will follow the same way out of this chaos as the world’s second largest economy is starting to reopen.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

BenzingaEditorial

Three Stocks That Won Last Week’s Popularity Contest

Published

on

Overwin Corona Virus

Last week was a good week for a lot of companies which reported their earnings. But a few of them truly stood out as blockbusters. Wayfair (NYSE:W), LivePerson (NASDAQ:LPSN), and Fiverr International (NYSE:FVRR) are some of them as they stepped up the game with their quarterly results. Let’s take a closer look at why these three publicly traded companies won last week’s popularity contest.

Online furniture retailer

Wayfair had a jaw-dropping performance since the mid-March lows. Net revenue of the online furniture retailer soared 84% to $4.3 billion. It greatly exceeded the $4.06 billion that analysts were targeting. If there is such a thing as a ‘perfect storm’, the pandemic was exactly that for Wayfair which historically has been struggling to achieve profitability. This time round, this was not the case as its active customer base grew 46% over the past year. By being forced to stay at home, consumers felt more inspired to make their homes more beautiful.

Wayfair’s adjusted profit came to $3.13 a share, which more than tripled Wall Street’s estimate. Moreover, the momentum is still being maintained throughout this quarter as sales are 70% higher so far. The company is growing a lot faster than the 20% year-over-year gain it reported during the first quarter of this year.

Tech stock

LivePerson provides an online chat customer support when the site visitor is getting frustrated or, even worse, is about to abandon a shopping cart. Its concept clearly works as the company exhibited its strongest top-line growth in 12 years. This 29% increase is its healthiest growth since the summer of 2008.

The online solutions provided 134 deals during the quarter. Seven of those contracts are expected to bring in at least $1 million in revenue over the following year.

LivePerson’s report might not have been mind-blowing, but it was a classic example of an excellent performance. Its new 2020 outlook includes revenue growing at a range between 22 to 24 percent, whereas just three months ago, the company expected it to be in the range between 17 and 22 percent.

The gig economy to counteract these challenging times

Fiverr has been one the winners during the pandemic as it runs a marketplace with offers of one-off jobs with attractive prices. It helped many survive the new reality shaped with pay cuts and job losses.

Its latest quarter saw its revenue rise 82% as its base of active buyers of freelance services increased 28%. Moreover, average spend per buyer increased 18%.

The increased supply is easy to answer, but so is the increased demand. By not losing time in daily commutes and other outside activities, people reprioritised and suddenly found the time for passion projects or simply new opportunities.

The Fundamental Lesson From the COVID-19 Pandemic

These three companies earned their gains fair and square, and in more ways than one. They got the job done during a time of crisis. Wayfair helped people feel better inside their homes as it beautified their self-quarantines. LivePerson helped both companies retain buyers as well as consumers to make their purchases. And last but not least, Fiverr’s platform enabled many to earn extra cash on the side and feel more financially stable. These examples portray perhaps the biggest lesson of the pandemic: people learned what is important to them and what they want to devote their time and effort to. The companies who met those needs were more likely to survive the storm. Some will emerge even stronger out of it.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

Continue Reading

BenzingaEditorial

Can Oil Giants Play the Long Game?

Published

on

oil industry stocks

Over the last few years, the performance of the energy sector has been among the worst-ones. It fell 45% over the last half of a decade whereas the S&P rose 59% over the same period. If we specifically look at oil, there is the supply and demand side to consider. Forecasts say there’s probably enough of oil to last during the next 100 years, considering current consumption trends. But demand is far less certain.

Supply and demand

We are running out of “easy” oil but forecasts on how much is left do vary wildly. The biggest problem is that the vast majority of R&D spending is focused on unconventional oil, and not on replacing oil. The industry has been focused on making shale more economical for almost a decade now. Moreover, the Trump administration has made it clear that it will not allow the sector to vanish. The economic equation behind it is rather simple. The less oil is left, the more money there will be in sucking out every drop. Scarcity is a great profit booster. Greater profits encourage companies to expand, not contract. Therefore, the fundamental concept of economics ‘advise’ sticking to these depletable sources until they are exhausted.

Even the Oil Giants Are Struggling

It would be challenging to find an integrated oil and gas company with a better balance sheet than Chevron (NYSE: CVX). But even with a strong financial position, Chevron still depends on the price of oil. Along with its U.S. competitor ExxonMobil (NYSE: XOM), they are the only two energy companies that hold the title of Dividend Aristocrats. This status is given to any company in the S&P 500 that has increased its base dividend for at least one quarter of a century but in an uninterrupted manner. As for Chevron, it has an impressive track record of 32 consecutive years. Moreover, it has increased its dividend by 79% over the last decade alone. But the pandemic devastated its profits.

Royal Dutch Shell plc (NYSE:RDS-B) has also swung to a historic and quite heavy loss with its latest quarter. The Anglo-Dutch oil titan warned that an uncertain demand outlook could curtail its third-quarter production. Most importantly, oil giants are aware that business may never return to normal.

The greener perspective

High prices are destroying the demand for oil as the world is turning to renewable sources and other energy storage mediums. Moreover, climate change concerns are creating significant regulatory pressure. The developed world is also taking action to promote electrification. The UK and France plan to ban new gasoline and diesel vehicle sales in certain regions by 2040. Moreover, electric vehicles are central to Europe’s post-pandemic recovery plan.

Electrification

EVs could truly eliminate the majority of oil consumption. But they need to be accompanied by significant improvement in battery technology and an expansion of the charging infrastructure. Moreover, they have to become more accessible price-wise. EV pioneer Tesla Inc (NASDAQ:TSLA) as well as startups such as electric and hydrogen-powered Nikola Corporation (NASDAQ:NKLA) disrupted the whole world as they are the ones who made this reality possible.

Oil Companies Can Still Find a Way to Exist in the New Era

As battery-electric vehicles go mainstream, it’s not hard to imagine oil companies utilizing their massive infrastructure to get into the battery-charging business. Many companies are already exploring these options.  Last week, the British oil and gas giant BP (NYSE:BP) committed to cut its oil production over the coming decade with very ambitious energy targets. BP plans to invest tens of billions of dollars over that decade to become one of the world’s largest renewable power generators. It might even settle for profits lower than it gets from oil in order to achieve that goal. But, it’s not like we’ll stop needing oil overnight. If anything, air travel is still fully dependent on fossil fuels.

Takeaway- nothing happens overnight

The bottom line is that some oil companies, even the giant themselves, may not survive the transition. But no one who works in the industry today will be around to see this entirely new oil-free future. It is like the story of the telephone industry: a telephone serves the same purpose it served one hundred years ago, but smart phones are giving us a ton of stuff on the side that no one could have possibly predicted back then.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

Continue Reading

BenzingaEditorial

Four EV Disruptors to Keep an Eye on

Published

on

Electric Vehicle Companies in the Automotive Industry - Success Despite Corona virus

Wall Street has been giving EV stocks quite a lot of attention lately and for a very good reason. The share prices of many electric vehicle manufacturers have hit all-time or at least 52-week highs. This is even more impressive considering that the pandemic created quite the turmoil for the global economy. Afterall, climate change will not wait for us to win the battle against COVID-19. We’ve gathered a list of four disruptive players who are all set to win the EV race.

The EV emperor

Tesla (NASDAQ:TSLA) is the first name that investors, as well as the whole world, relate to EVs. The EV pioneer is targeting half a million deliveries in 2020, which would mark a 35% YoY growth.  In late July,  Tesla reported its fourth consecutive quarterly profit. By doing so, it became eligible to be considered for inclusion in the S&P 500 Index. However, for Tesla to actually be considered, an existing member needs to be taken off the index due to no longer meeting the eligibility criteria. On the other hand, Tesla is already having its best year ever. Year to date, its stock is up an eye-popping 260%. And with its newly announced Austin factory, which will be its biggest yet, Tesla is not showing any signs of slowing down.

If you believe in the future of EVs, Fun-Utility Vehicle (FUV) could be a less expensive way to enter the game

Oregon-based Arcimoto (NASDAQ:FUV) went a long way since going public almost three years ago. Since then, it has built its production facility, completed regulatory compliance for its flagship EV- Fun Utility Vehicle (FUV), started production one year ago and is already now delivering vehicles to early customers. FUV is a tandem two-seat, three-wheeled electric vehicle. And there are two EVs which are due to start production by the end of the year. The customizable Deliverator can transport a variety of food products, whereas the specialized Rapid Responder is specifically designed to support emergency and law-enforcement services.

Low-speed EVs that serve a specific purpose

Texas-based EV manufacturer of purpose-built and automotive-grade EVs, Ayro (NASDAQ:AYRO), began trading on May 29. This newcomer creates sustainable electric solutions through light-duty vehicles for open or closed infrastructures such as golf courses and airports. LSEVs do serve a niche, but this is a growing, market with great potential in the upcoming decade.

The integration of solar technology

It’s no secret that EV require a supply of energy. This energy can derived from various type of batteries and sources. Thus the sector is also becoming quite diverse based on vehicle type, battery type, etc. Worksport (OTC:WKSP) offers a full line of innovative, high quality yet affordable tonneau covers for pickup trucks, US’ favorite vehicle. Its SC3 and TC3 are high quality basic covers that undermine competing products with a lower price. SC3 Pro and SC4 come with major product enhancements that will not only improve the user experience but even the installation process. But Worksport’s crown jewel is TerraVis which will redefine pickup beds as they integrate complex solar technology. Earlier today Worksport announced a launch date for TerraVis. By offering a disruptive product at an affordable price, Worksport has the potential to disrupt much more than the market for tonneau covers as this technology can also increase the driving range of any EV.

EVs are all set to transform the world

In 2019, EVs accounted for 2.6% of global car sales. 2019 also marked their 40% year-over-year increase. By 2027, analysts expect the market’s value to reach $802 billion. Last year, the market’s value was approximately $162 billion. Therefore, this growth implies an impressive CAGR of 22.6% . Electric vehicles have all it takes to transform nearly every aspect of transportation, including fuel, carbon emissions, costs, repairs, driving habits and consequently- our everyday footprint.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

Continue Reading
Advertisement

Submit an Article

Send us your details and the subject of your article and an IAM editor will be in touch with you shortly

Trending