Oh, how the mighty have fallen.
In what can only be described as a sign of the times, Exxon got the boot from the Dow on Monday, adding insult to injury in a year that’s already been particularly cruel to the company.
Beset by plunging crude prices and generalized doubts about the future of fossil fuels, the shares have declined by nearly 40% in 2020.
Oil demand collapsed in the second quarter as the pandemic brought global trade, travel, and commerce to a halt.
Just prior to the pandemic lockdowns, Riyadh and Moscow engaged in a short-lived (and extremely ill-timed) price war that sent crude spiraling lower some six weeks before the bottom fell out completely on April 20, when WTI briefly became less than worthless.
The disparity between energy and tech this year is quite something to behold. Often, the simplest visuals are the most poignant — the figure (below) is a good example.
“The index changes were prompted by DJIA constituent Apple’s decision to split its stock, which will reduce the index’s weight in the GICS Information Technology sector”, S&P Dow Jones Indices said in a statement.
Exxon rang up a $1.1 billion loss in the second quarter, making what was already unprecedented even more anomalous.
You can take the figure (below) back as far as you want – you will not find a comparable quarter. Exxon reported zero cash from operating activities for the period.
At least Exxon will have company when it slinks out the back door. Pfizer and Raytheon will join the oil giant in bidding the Dow farewell.
On their way to the parking lot, the trio will see Salesforce.com, Amgen, and Honeywell strolling in the front entrance. They’ll enter the index next week.
“The announced changes help offset that reduction [and] help diversify the index by removing overlap between companies of similar scope and adding new types of businesses that better reflect the American economy”, S&P Dow Jones went on to say.
Exxon, apparently, doesn’t “reflect the American economy” so much anymore.
You almost feel sorry for the iconic brand. And then you remember it’s Exxon.