Why Short Interest in XOM Has Fallen



Short interest in XOM

In the previous part of this series, we reviewed institutional activity in ExxonMobil (XOM). Now let’s look at changes in short interest in XOM. Short interest (percentage of outstanding shares) in XOM has fallen from 0.74% on July 2 (the beginning of the current quarter) to the current level of 0.65%. A fall in short interest usually shows that the bearish sentiment for the stock has fallen. However, during the same period, XOM’s stock price has fallen 2.6%.

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Why the change in sentiment?

Though ExxonMobil’s second-quarter earnings missed the Wall Street estimate, the company’s earnings rose year-over-year. ExxonMobil’s earnings rose from $3.35 billion in Q2 2017 to $3.95 billion in Q2 2018. The growth in total earnings was due to a rise in upstream earnings partly offset by a fall in downstream and chemical earnings year-over-year in Q2 2018.

Plus, in its latest earnings, XOM highlighted its upstream projects’ progress, which was in line with the company’s expectations. In the second quarter earnings release, Darren Woods, XOM’s chair and chief executive officer, stated, “Key projects in Guyana, the U.S. Permian Basin, Brazil, Mozambique and Papua New Guinea are positioning us well to meet the objectives we outlined in our long-term earnings growth plans. The high quality of these resources, combined with our strengths in project execution and innovation, will generate strong value over time.”

Thus, the earnings highlighted XOM’s management’s belief in the company’s steady future growth.

Peers’ short interest

Short interest in XOM’s peers Chevron (CVX), Petrobras (PBR), and Suncor Energy (SU) has also fallen by 0.12%, 0.55%, and 0.11%, respectively, since July 2. Currently, the short interest in CVX, PBR, and SU stands at 0.94%, 1.15%, and 0.42%, respectively. During the same period, CVX has fallen by 4.2%, but PBR and SU have risen by 2.4% and 2.3%, respectively.

Move to the next part to know where XOM’s valuation stands.


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