The Fall Of Tesla And The Rise of Exxon Amid The Energy Crisis
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By UBsDailyNews
Growth stocks have been thoroughly hammered this year, with high inflation and rising interest rates pinching growth equities of all stripes. But few stocks exemplify the dramatic shake-up at the top, like leading EV maker Tesla Inc. (NASDAQ: TSLA). TSLA stock has tanked 69.5% in the year-to-date, wiping off a staggering $877 billion from its market cap. In comparison, the S&P 500 has declined a more modest 19.7% over the timeframe. Tesla has gone from being the fifth most valuable public company and now ranks just thirteenth with a market cap of $385 billion. Tesla’s woes are well documented, including Musk's Twitter takeover and related distractions; worries that high inflation and rising interest rates will dampen consumers' enthusiasm for EVs, as well as investor jitters about growth assets. TSLA shareholders are furious at CEO Elon Musk, The Wall Street Journal reports, for his Twitter antics and tomfoolery, which has led to several downgrades for the stock. Meanwhile, hordes of customers are canceling their Tesla orders, "His personality is absolutely tanking the Tesla brand. I'm looking forward to having an Elon-free existence,’’ a biotech exec with a Model S lease has told CNET. "There is no Tesla CEO today," tweeted Gary Black, a hedge fund manager with ~$50 million worth of TSLA stock told Futurism.
slightly below levels reached by recent peaks.
The analysts note that commodity prices have declined from very high levels earlier in 2022, but have predicted that prices are likely to remain cyclically strong through 2023. This, combined with modest growth in volumes, will support strong cash flow generation for oil and gas producers. Moody’s estimates that the U.S. energy sector’s EBITDA for 2022 will clock in at $623B but fall slightly to $585B in 2023.
The analysts say that low capex, rising uncertainty about the expansion of future supplies, and high geopolitical risk premium will, however, continue to support cyclically high oil prices. Meanwhile, strong export demand for U.S. LNG will continue supporting high natural gas prices.
The combined dividend and buyback yield for the energy sector is now approaching 8%, which is high by historical standards. Similarly elevated levels occurred in 2020 and 2009, which preceded periods of strength. In comparison, the combined dividend and buyback yield for the S&P 500 is closer to five percent, which makes for one of the largest gaps in favor of the energy sector on record.
In other words, there simply aren’t better places for people investing in the U.S. stock market to park their money if they are looking for serious earnings growth.