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BP stock pops on strong Q1 earnings, Big Oil share buybacks

Yahoo Finance Live anchors discuss earnings results for oil giant BP and textbook provider Chegg.

Video Transcript

AKIKO FUJITA: Well, BP is out with earnings, posting its highest first quarter profit in over a decade. Even after offloading its near 20% stake in the Russian controlled oil giant Rosneft, a sharp rise in oil and gas prices stemming from Russia's invasion of Ukraine helping boost profits. And we're seeing the stock getting a pop today, Brian.

But this really is about the buybacks too that were announced. $2 and 1/2 billion in the current quarter. $1.6 billion in shares in the first quarter. And I think this is an interesting one to watch. No surprise that BP, just the latest to post very strong earnings, given where oil prices have traded. We saw that with Exxon, as well Chevron.

But you're watching what exactly was announced in every one of these earnings. And I think that's only going to invite the criticism from the lawmakers who've said, look, you've got these record profits. But you're passing it down to shareholders and not necessarily investing in more production, which has always been the criticism. And you saw right there, BP, it's $2 and 1/2 billion for Q2. Exxon tripled share buybacks to $30 billion dollars through 2023. And then, you had Chevron repurchasing a record $10 billion dollars in stock.

BRIAN CHEUNG: Yeah, I mean, Akiko, this is just, kind of, reinforcing what we've been talking about on this show, which is that the drillers have always had the money to turn the drills back on in the United States, do a little bit more exploration to perhaps alleviate some of these pressures. But the overarching narrative of, well, the Russia-Ukraine conflict was going to be a temporary thing, incentivize the companies to prioritize the shareholder as opposed to using the cash that they have to build up the supply that we have here domestically.

And that picture is very much underscored by the earnings report, which they had a massive, massive hit from the Russia-Ukraine situation. But they still had the cash available. And what do they do with it? They deployed it to the shareholders. And I think that that is definitely, as you mentioned, going to attract a lot of eyes on capital, though.

AKIKO FUJITA: Well, and the hit you're talking about, $25 billion dollars in terms of a 20% stake in Rosneft.

BRIAN CHEUNG: Huge. That's so many b's.

AKIKO FUJITA: But I wonder if we can pull up that chart we just showed again from Bloomberg, because that shows you where the money has gone. A good chart coming out of Bloomberg here. 2013 is the last time oil was trading at over $100 dollars a barrel. You see how much has shifted, how much they spent back then versus where things are at 2022.

And that has been the criticism from the political side, whether right or wrong, is that you're not treating this in the same way that you did before because it is about the duty to shareholders, which, you know, you could argue, they are publicly traded companies.

BRIAN CHEUNG: Well, I mean, and again, that's not an oil company story, right? All publicly traded companies are very much beholden to what their shareholders want. But I think it just is very interesting to see to what degree-- these oil companies are not being pressured enough as they maybe should be to address the inflationary issues that Americans are feeling at the pump on a daily basis.

That's the big difference between the 1970s oil crisis and now is that America is a leading energy producer, which it was not in 1970 when OPEC was very much handcuffed to American oil prices. But we'll leave that conversation there for right now and shift to another market mover on this morning, which is textbook company Chegg, which is down, ouch, 31%. That's after the company slashed its full-year profit outlook in its first quarter earnings.

And the company continuing to face pressure as the education industry faces headwinds amid rising inflation. The commentary from the company, Akiko, quote, "Students continue to take fewer classes. And those they do take are often less rigorous with fewer or more limited assignments." I don't know if the underlying tone here is that students aren't using their textbooks or they're not studying as hard. But, you know, I-- I think the broader question here is, who-- who buys textbooks anymore? I've gone through so many classes in college, at least at Syracuse, where you buy the textbook, you never end up using it.

AKIKO FUJITA: Yeah, I mean, that--

BRIAN CHEUNG: I don't know about UFC. But I--

[LAUGHTER]

AKIKO FUJITA: I don't know. It's been a while since I've been to college, you and I have both been to college. So I don't know how it's used. But with Chegg specifically, I mean, it's not just about books, right? They are-- also offer tutorials too. And the number that stood out to me from CEO Dan Rosensweig is one million. One million students have postponed higher education over the last two years. That is the largest decline in 50 years.

And so that raises the question of, you know, what does this mean for higher education as a whole? And I know we've talked about this in the past, enrollment down in community colleges as well, you know. Chegg always-- every time we've had a conversation with Dan, he's always quick to remind us that, look, the average age of a college student is not 18 years old straight out of high school.

BRIAN CHEUNG: No.

AKIKO FUJITA: And so you have to wonder, what is leading to that postponement? Is it about the job market? Is it about the shutdown that happened during the pandemic, not being able to work and then opting to, you know, prioritize that instead of education? I mean, there's probably a lot of threads there. But it's an interesting number to track.

BRIAN CHEUNG: Yeah, I mean, again, but I think blaming it on the pandemic is one thing. There are these secular trends that have been happening in the education industry at large that I think are the bigger story here. And I think you have a lot of people, especially with rising costs of tuition and the conversation nationally around student debt cancellation, over not necessarily what is the need just for college itself, which I think maybe Chegg management is blaming it on and pinning-- pinning this to.

But also, for those that are enrolled in college, what is the utility of a textbook? There are so many situations where the professor is asking you to buy his own or her own textbook just because, well, they published it. And they're trying to make money. I mean, I'm going into my conspiratorial voice here now.

[LAUGHTER]

But it's just like it--

AKIKO FUJITA: I'm like, you're really passionate about this.

BRIAN CHEUNG: I think the whole textbook-- the whole textbook industry is, kind of-- is, kind of, a sham.

[LAUGHTER]

AKIKO FUJITA: Yeah, but-- but to-- to point to your-- you know, the-- the point you made about the secular decline, you're right. I mean, higher education, colleges, universities, have been pointing to a slowdown in enrollment for some time, which is why we see them increasingly tie up with companies like a Disney or like an Uber to offer additional, sort of, skill up, right, these courses that allow them to get an additional degree. I mean, that's another, you know, revenue that they're looking to as well.