Why Transocean Stock Skyrocketed Nearly 50% at the Open Today
Shares offshore-focused energy services company Transocean (NYSE: RIG) rose nearly 50% in early trading on Nov. 24. Although the stock didn't hold those gains for long, it was still up 16% or so at 10:30 a.m. EST. Oil prices were higher at the start of trading, but not by enough to justify the massive early price move.
Indeed, the story here is much more complicated than just energy prices. For starters, Transocean's top and bottom lines aren't directly impacted by the vagaries of oil and natural gas. Its customers are the ones whose revenues and earnings rise and fall along with the energy market. However, demand for Transocean's services generally picks up when oil is expensive and falls when oil is cheap. So rising oil prices will, eventually, flow through to increased demand here. Oil was higher in early trading today. But, in the near term, the ups and downs of energy prices really aren't that important.
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