RE:Take MEG plunges from 24 to 16, now struggles to maintain 17 my hunch is the macro (recession fear) is gripping the market and the USD is king now, fundamental is out the door. Oil stocks is pricing at $50 oil when old metric is used. People continue to overlook the oil/gas supply constraint, and demand growth in india and SE asia. China is loosening its covid restriction. There are news about china resort to buying SPR oil from US even when they can buy oil cheaper from russia. Fed rate hikes to curb demand but do nothing to add supply, it may even reduce supply as rate hike add cost of capital
drunk@noon wrote: At 5 lower oil price, we are talking 2 bill free cashflow range. Mid to high thirties free cashflow. Yet even after the plunge, the share price action is heavily squewed to the downside, i.e before market when wti was down 80 cents, it was ready to open down 3%. Oil works it's way up to close to 2 dollars, share price goes positive, but just barely. If oil drops two dollars, we go back to 16 dollars with a bullet.
I don't get it, risk vs reward should be heavy to the upside, i.e if oil stays at these levels, you are talking an investment which yields close to 40%. And this after the plunge in sharprice talking away the profit talking risk. Why is these stocks acting this way/ The technicals are horrible--it's head and shoulders.
Meanwhile ARKK jumps 2% and the likes of snowflake. Talking heads just say, hey those stocks are off, 50% so even though they don't make money they are trading at only 14 times revenue vs 25 times. Time to buy. Baseless, yet it seems to rule the day.