What happened

Shares of Baker Hughes (BKR -0.17%), a leader in services for the oil and gas industry, are tumbling 13.2% in morning trading Wednesday after the company reported missing top- and bottom-line estimates for the second quarter.

Baker Hughes said its results were hurt by inflation, the ongoing supply chain crisis, and suspending operations in Russia following the country's invasion of Ukraine. Its stock fell below $25 a share by 10:45 a.m. ET today.

So what

Consumer energy demands are rapidly retreating as inflation that reached 9.1% in June, the highest recorded level in over 40 years, sapped spending power. Gasoline prices had also hit unprecedented levels of $5 per gallon, though they have since eased back on recession fears. AAA says the average national price of a gallon of regular gas is now $4.47, down almost $0.20 in the past week or so. 

Baker Hughes reported revenue of $5 billion for the period, a 4% increase sequentially, but down 2% from the year-ago period. It was also below Wall Street expectations of $5.3 billion. Similarly, adjusted earnings of $0.11 per share were up compared to last year's $0.10 per share, but well below analyst forecasts of $0.21 per share.

Now what

CEO Lorenzo Simonelli said in a statement, "The demand outlook for the next 12 to 18 months is deteriorating as inflation erodes consumer purchasing power and central banks aggressively raise interest rates to combat inflation."

But he also believes that because the industry has underinvested in production, and it's going to need to replace Russian oil that's been removed from the market, oil prices will remain elevated for the foreseeable future, which is a positive for Baker Hughes' growth.