Oil majors print cash. Renewable stocks promise to print cash someday. Wall Street says buy the second one.
This is the same Wall Street that spent three years telling you to load up on SPACs because disruption. The same Wall Street that recommended Peloton at $160 because pandemic trends are forever. The same Wall Street that has never met a speculative pivot it didn't want to dress up as strategic diversification.
The thesis goes like this: Sure, ExxonMobil and Chevron are about to report earnings that could fund a small nation's GDP. But have you considered these scrappy little renewable plays? They've got AI integration. They've got ESG scores. They've got PowerPoint decks that use the word "synergy" seventeen times. What they don't have is profit. But that's fine because we're investing in the future.
The future costs money. The present makes money. Wall Street looked at both options and said the first one seems undervalued.
Retail traders will read this headline and think they're getting in early on the next big thing. They'll skip the boring oil stock trading at 8x earnings and throwing off dividends like a broken ATM. They'll buy the renewable stock trading at whatever multiple you use when there's no E in the P/E ratio. Then they'll watch oil majors buy back another $50 billion in stock while their renewable play announces a capital raise to fund operations through Q3.
Six months from now they'll be refreshing their brokerage app wondering why the company with actual revenue went up and the company with a vision board went down. The answer will be the same thing it always is. Charts don't care about your values. Neither does my portfolio.
Photo by Joachim Schnürle on Unsplash
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