The Exxon Mobil Corporation reached lofty heights as a mega-billion dollar corporation for a compelling reason. Exxon deals with oil and fuel. Without both, not only can planes, boats, automobiles, and more not travel, electricity shortages would emerge. Even with an increase in alternative energy sources, Exxon mobile’s product remains in massive demand. So, it is somewhat shocking that the company drops from the S&P 500’s top 10 for the first time in financial history.
The S&P 500 debuted initially roughly 90 years ago. Exxon Mobile occupied a place in the top 10 since day one. The company finds itself bumped due to competition. The competition doesn’t come from the product Exxon offers. Instead, Exxon faces competition in valuation. Within two weeks, Procter & Gamble Co. surprisingly moved Exxon one more notch down the Top 500 listing. Technology companies growing in value may soon be worth more than Exxon. Facebook, Amazon, Alphabet, and others may move the oil giant further down the S&P ladder.
Visa’s prominence likely coincides with the success of the technology sector. Consumers use Visa cards to pay for products on Amazon and elsewhere. The credit card company may be riding the growth of the tech sector. As more consumer and service apps and companies emerge, look for Visa to thrive even more. Perhaps Procter & Gamble Co. is benefiting from tech’s growth, too.
Exxon can’t compete with Visa and the tech sector because they aren’t competitors. They are businesses doing well as a reflection of the current economic landscape.
Exxon Mobile also hurt itself in several ways. The company opted to invest resources in Russia despite a turning global political climate against the nation. Today, sanctions are in place against Russia, and this hurt Exxon’s investments there.
Exxon also can’t escape the shale revolution, either. The arrival of fracking and the extraction of shale oil hampers Exxon’s business model. Shale’s success combined with competition from wind and solar probably hurts Exxon in many ways.
A position of 12 on the S&P 500 doesn’t reflect harsh economic realities. Exxon Mobile Corp. remains one of the biggest companies in the world. That said, falling out of the top 10 surely displeases both board members and executives alike.