What Happened to Santo Ltd’s Share Price?
Shares in oil and gas producer Santos Ltd [ASX:STO] extended their recent poor run today, shedding another 1.5% in a mixed Aussie stock market. Today’s loss comes on the back of an 8.6% plunge yesterday. The stock has now lost more than half of its value in the past four months.
Why Did This Happen to the Santos LTD Share Price?
Put simply, plunging oil prices are poisonous for Santos’ business. The latest drop in crude oil prices has investors worried about Santos’ ability to fund the large liquefied natural gas project it has underway in Queensland. Others are pointing out the potential for Santos to lose its investment-grade credit rating.
Here’s another point that hasn’t helped matters — the energy stock research team at investment bank Credit Suisse Group AG [NYSE:CS] say that if current oil prices and foreign exchange rates persist forever, Santos’ share price could go to zero.
Given this gloomy backdrop, it’s not hard to see why investors are bailing out of Santos.
What Now for Santos Ltd?
The intense pressure piling up on Santos makes this stock a high-risk investment. If the bearish trend in the oil markets reverses, you could see a huge rally in the Santos share price remarkably quickly. But until that happens, owning this stock is only for the brave.
If you’re looking for an exciting speculative play that could bring you far greater returns than Santos, go here to find out more .
Cheers, Tim Dohrmann
Small-Cap Analyst, Australian Small-Cap Investigator