Exxon Mobil exits the Dow Jones index
The Dow Jones index takes into account the stock values of the 30 largest American companies, and the oldest of those companies was Exxon Mobil, which had been a part of that select index for almost 100 years (since 1928).
And I say was the oldest, because it has ceased to be included in said index since the end of August of this year.
For those of you who don’t know, Exxon was the most valuable company in the world in 2013.
Other new companies (many of them tech) are worth more than Exxon on the stock market, and Exxon has been forced to “downgrade”.
If we think a bit this is not unusual, and is a consequence of the changes in the stock markets. Oil companies have not had a great future for some time, although they still provide good dividends to their shareholders.
Climate change is reorienting energy consumption towards more sustainable ways and Covid-19 has come to reinforce this trend. And as a consequence, oil companies will have to reinvent themselves quite a bit to continue in the market, although they still have a few dozen years left with good results; but what counts on the stock market are the prospects for the future, and these are not very promising today.
Of course, the Exxon spokesman has been quick to comment publicly that his departure from the Dow means nothing to them, but actually it does, and a lot. It is a change in trend.
I do not know what Exxon will do to stay in the market, and for now they have been cutting investment and spending to continue paying good dividends to their shareholders.
This is a short-term action to keep shareholders happy, but if the company does not reinvent itself and invest in other areas of business, over time they will fall more and more, and in a few years they will not be even the shadow of what they were.
As I have mentioned so many times, in all markets there are changes and only companies that adapt to them quickly manage to move forward.
We’ll see what Exxon does.