Here's Why Shares of Baker Hughes Slumped in January
Shares of oil and gas equipment and services company Baker Hughes (NASDAQ: BKR) declined 16.6% in January, according to data from S&P Global Market Intelligence. The decline comes as the company's fourth-quarter 2023 earnings and 2024 guidance confirmed some of the near-term headwinds in its business. In a nutshell, it's not that Baker Hughes isn't set to grow again this year. It is. But recent events have tempered its 2024 growth outlook.
The company's troubles in the short term come from three interconnected factors. First, according to CEO Lorenzo Simonelli, "[W]eaker-than-anticipated oil demand coupled with robust production growth led to an unexpected inventory build into year-end." That's bad news for Baker Hughes, because it encourages oil companies to hold back on investment.
Indeed, Simonelli noted that the company had lowered expectations for North American drilling and construction spending in 2024 from being "flattish" to a new expectation of a low- to mid-single-digit decline.
Source Fool.com
