There is no school like the old school
The past few years have been wild for markets, from the March 2020 covid-19 crash, the stimulus-saturated quick recovery and intraday renaissance, to the current resurgence of residual value stocks.
One of the best ways to sum up how surprisingly strong the tides of market trends have been lately is to take a look at a stock valuation chart comparing ExxonMobil with Zoom Video Communications over this period.
Zoom entered 2020 with a market capitalization of less than $20 billion, but ended it with a year worth estimated at $100 billion. At its absolute peak in the fall of 2020, it was worth more than $160, outstripping even ExxonMobil, the old economy giant with its roots in John Rockefeller Standard Oil.
Couldn’t be more zeitgeist.
Fast forward to early summer 2022 and things look very different.
Zoom’s stock market value has collapsed again to $27 billion, as investors dump most of the pandemic-era winners in favor of stocks that benefit from a return to normalcy. But the biggest winners lately are the old tool companies in the frayed industries – above all those pumping hydrocarbons from the ground.
ExxonMobil’s stock market recovery first began when Pfizer and others announced that they had developed a robust slate of Covid vaccines in November 2020. But it is supply chain disruptions and Russia’s invasion of Ukraine that really sent oil prices and Exxon stocks soaring.
OG Big Oil started 2022 with a market capitalization of $270 billion, but at pixel time is close to $400 billion. This is the largest number since the massive collapse in energy prices that began in 2014.
Exxon even announced in its first-quarter earnings report an expanded buyback program, with the goal of repurchasing $30 billion of its stock by the end of 2023 — enough to buy Zoom outright (control premium not included, natch).