It Begins: Energy Giant Chevron Suspends Stock Buyback, Blames “Cash Flow Squeeze”
It was less than 24 hours after we posted that either oil will double from here allowing energy companies to grow into a normal P/E multiple, or energy stocks will have to crash by over 40% for the ridiculous 23x to return to its normal, long-term average of 13.6x. Moments ago energy giant Chevron admitted that not only does it not see oil doubling any time soon, but that energy prices are almost certain to go far lower from here, and as a result the company decided that after buying back $5 billion of its shares in 2014, i.e., buying high and higher before the stock crashes may not be the best use of dwindling cash flow, and as a result has just suspended its stock buyback program of the rest of 2015. Yes, energy giant Chevron just ended its buyback!
As regular readers know, company buybacks are forecast to be the single biggest source of demandfor stocks in 2015..
… which means this may well be the beginning of the end of the 6 year bull market. For now, the realization if only hitting Cheveron stockholders.
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