Shares of Chevron Corp. plummeted more than 5% on Friday following the release of the company’s quarterly earnings, which fell well below expectations. The decline in earnings was attributed to the negative impact of rising oil prices on Chevron’s downstream business.
Chevron’s stock (CVX) was set to close at its lowest level since September 30, 2022, and was on track for its largest one-day percentage drop since September 23, 2022.
The company’s underperformance weighed heavily on the Dow Jones Industrial Average, causing it to lose 60 points. This marked the sixth consecutive session in which Chevron experienced losses, and it currently stands as the worst-performing Dow stock this month, with losses approaching 14%.
Exxon Mobil Corp., another major player in the oil industry, also reported disappointing third-quarter earnings earlier on Friday. While Exxon’s stock dropped nearly 2% in response to the news, their quarter snapshot showed some signs of improvement in upstream margins, according to CFRA analyst Stewart Glickman.
Chevron’s adjusted per-share earnings for the quarter were $3.05, significantly lower than the FactSet consensus of $3.70. Revenue also experienced a decline from $63.5 billion to $51.9 billion compared to the previous year. Despite falling short of analyst expectations, this figure surpassed the estimated $51.4 billion.
The downstream business of Chevron was particularly impacted by rising oil prices, leading to negative “timing effects” and increased feedstock costs in the refining and marketing division, according to Citi analyst Alastair Syme.
Furthermore, the company’s upstream profitability was significantly weaker than anticipated, as noted by Piper Sandler analyst Ryan Todd. Free cash flow for the quarter amounted to approximately $4.2 billion, well below the expected $6.67 billion.
Despite the disappointing earnings, Chevron recently made headlines with its announcement of an all-stock transaction to acquire Hess Corp. for $53 billion. However, this acquisition failed to overshadow the disappointing quarterly results.
Overall, Chevron’s stock has experienced a decline of nearly 19% this year, in stark contrast to the Dow’s mere 2% decline.
Tomi Kilgore contributed to this report.