Shares of ExxonMobil Corporation (NYSE:XOM) are getting pounded again on Monday and were down 6% at 3:15 p.m. EST. Today's drop follows a similar fall last Friday, which was the stock's worst day since 2011.
Several factors are fueling today's sell-off in ExxonMobil. First, the stock market tumble from last week has intensified today, which is taking virtually everything down with it, including the price of oil. That drop in oil is adding fuel to Exxon's downdraft, which is still in free fall after last week's post-earnings drubbing when the oil company's fourth-quarter results came in well below expectations.
Heading into the report, analysts expected that Exxon would earn $1.03 per share, fueled by a rapid rise in oil prices. However, the company only turned in $0.88 per share in earnings. Several factors fueled the miss, including a 3% drop in production and much weaker international refining margins. Because of that, operating cash flow came in slightly below the third quarter and matched the year-ago period. This was a surprise, since the oil giant should have produced a gusher of cash flow thanks to higher oil prices.
That unexpectedly poor quarter soured investors on the company at the worst possible moment because it came just as the stock market seems to have run out of gas. That's leading investors to scramble to sell so they can lock in profits just in case the bottom drops out of the market.
There's no doubt that Exxon's fourth-quarter report was disappointing, especially compared to rivals that reported stronger numbers. That said, the company is investing heavily to turn things around so it can grow earnings and cash flow in the coming years, including announcing a $50 billion bet on the U.S. energy sector. If that plan works, it could richly reward investors who choose to take advantage of the oil giant's recent sell-off.