- Exxon Mobil was briefly unseated as the largest energy company in the U.S. by renewable powerhouse NextEra Energy.
- Florida-based NextEra, which many investors consider a great way to play the boom in renewable energy, is thriving.
- As the performance of NASDAQ shows us, investors are very comfortable betting on the future state of the world.
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As recently as seven years ago, ExxonMobil was the world's largest publicly traded company. Exxon has, of course, long-since lost that title and its market cap sits at just 7% of Apple's.
On Friday, Exxon lost another meaningful title.
The company was briefly unseated as the largest energy company in the U.S. by renewable powerhouse NextEra Energy.
A Tale of Two Energy Companies
While Exxon has been on a downward trajectory for years, COVID-19 has been particularly trying. Exxon's market cap has been slashed in half over the last six months to just $138 billion (the same size as Zoom and down from a portly $500 billion in 2007).
- Oil consumption has collapsed during the pandemic and Exxon reported a $1.1 billion second quarter loss, its first back-to-back quarterly net loss in 36 years.
The Future For Crude: The pain for big oil isn't expected to dissipate anytime soon. Brent crude futures fell below $40 on Friday to a four-month low. And a new report from Goldman Sachs suggests Saudi Arabia's Finance Ministry expects low oil prices (sub $50) for the next three years.
Florida-based NextEra, which many investors consider a great way to play the boom in renewable energy, is thriving.
What They Do: 70% of NextEra's revenue comes from its regulated utilities business. Ironically, this business is heavily dependent on fossil fuels (NextEra subsidiary Florida Power & Light generates roughly 75% of its electricity from natural gas).
NextEra's renewable business, which accounts for the other 30% of revenue, is the largest producer of wind and solar power in the world. With a strong tailwind of federal tax credits and investor momentum, NextEra's renewable business is considered best-in-breed.
Head To Head
- Geography: Exxon has operations on six continents. NextEra operates in the U.S. and Canada.
- Headcount: Exxon has 74,000 employees. NextEra, just 15,000.
- Returns: Over the last decade (including dividends) NextEra investors have seen a return of 600%. Exxon investors, negative 25%.
The Takeaway: As the performance of NASDAQ shows us, investors are very comfortable betting on the future state of the world.