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Why Has Short Interest in ExxonMobil Risen?

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Sep. 14 2017, Updated 9:36 a.m. ET

Short interest in ExxonMobil

Short interest in ExxonMobil (XOM), expressed as a percentage of outstanding shares, has risen from 0.64% in mid-April to the current level of 0.83%. Usually, everything else being equal, a rise in short interest could indicate an increase in bearish sentiment toward a stock. During this period of rising short interest, XOM’s stock price has fallen 7.0%.

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Why the rise in bearish sentiment?

The rise in short interest in ExxonMobil since April could be attributed to the decline in oil prices in 2Q17. Oil prices significantly impact its upstream business earnings. WTI (West Texas Intermediate) prices have fallen 11% in 2Q17, but oil prices saw some respite early in 3Q17. Now, due to Hurricane Harvey, oil prices have again been impacted over the past couple of weeks, with XOM’s downstream business taking a hit from the hurricane.

Meanwhile, the increase in short interest in ExxonMobil could be due to its 2Q17 earnings, which missed estimates. Although ExxonMobil’s 2Q17 earnings showed a rise over 2Q16, they fell short of the Wall Street analysts’ expectation. (For more on this, you can refer to “ExxonMobil’s 2Q17 Earnings Rose despite a 7% Earnings Miss.”)

Peer short interest

By comparison, peers Chevron (CVX), Petrobras (PBR), and Suncor Energy (SU) have also witnessed rises in their short interest, by 0.27%, 0.07%, and 0.35%, respectively, since mid-April. CVX, PBR, and SU now have short interests of 1.4%, 1.1%, and 0.8%, respectively.

Notably, since mid-April, PBR stock has fallen 1.2%, while CVX and SU have risen 0.4% and 2.2%, respectively.

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