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Why Did Whiting’s Stock Fall after Its 4Q16 Earnings Release?

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Whiting’s stock performance

Whiting Petroleum’s (WLL) stock fell 6.9% the day after its 4Q16 earnings release on February 21. However, WLL’s stock has risen significantly over the past year. YoY (year-over-year), WLL has risen ~133%. In this part of our series, we’ll analyze Whiting’s stock performance with respect to movements in the broader industry and the broader market.

As the graph above shows, WLL’s performance has been driven mainly by WTI (West Texas Intermediate) crude oil prices (USO). Crude oil prices, along with natural gas prices (UNG), have also been driving the broader industry ETF, the Energy Select Sector SPDR ETF (XLE).

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From February 8 to February 22, Whiting’s stock was outperforming the Energy Select Sector SPDR ETF (XLE), giving higher returns than XLE at the end of the period. WLL’s stock rose 0.75% during the two-week period while XLE fell 0.78%. Both XLE and WLL’s stock underperformed the SPDR S&P 500 ETF (SPY) (SPX-INDEX), the broader market fund. The broader market (DIA) (DJIA-INDEX) (ONEQ) (COMP-INDEX) gave better returns in the two-week period under discussion compared to the energy sector ETF.

WLL’s stock fell significantly on February 22, 2017, following its after-market 4Q16 earnings release on February 21. Crude oil prices fell ~1% on February 22, so the drop in WLL’s stock was likely due to the drop in crude oil prices. However, its stock rose 2.8% in after-market trading on February 22 as the markets reacted to its better-than-expected 4Q16 earnings and revenue. Crude oil prices rose 2% on February 23, 2017, which also likely aided the after-market recovery.

Next, we’ll look at WLL’s implied volatility.

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