Liberty Energy Inc. reported an adjusted net income of 12 cents per share for the second quarter of 2025, which was below expectations. This was a significant drop from last year’s 61 cents, largely due to ongoing economic challenges and decreased customer activity. The company’s revenues reached $1 billion, beating forecasts by $37 million. However, this represented a 10% decline from $1.2 billion in the previous year, reflecting a drop in completion activities.

Ebitda and Nuclear Collaboration

Adjusted EBITDA was $180.8 million, down from $273.3 million last year and below the expected $194.1 million. Liberty Energy has teamed up with Oklo to explore the use of distributed natural gas power and small modular nuclear reactors. As of June 30, the company had $19.6 million in cash and cash equivalents and a long-term debt of $160 million. Overall, Liberty Energy’s liquidity was $276 million, and it cut capital spending to $134 million from an earlier estimate of $165.7 million. Despite some market ups and downs, North America’s oil production remains steady. However, activity is predicted to slow down in the second half of the year. Liberty Energy plans to focus on its growing simul frac business, leveraging its advanced technology and strong financial position. Given the recent earnings report, we foresee a bearish outlook for the company in the short term. The missed adjusted net income and the sharp decline from last year indicate downward pressure on the stock price. Therefore, we recommend considering put options to benefit from a potential decrease in value in the next few weeks.

Industry Data and Strategy Outlook

The drop in completion activities is supported by broader industry trends. For example, the Baker Hughes U.S. rig count decreased to 488 in late May 2024, down from 570 the previous year. This supports our view that a quick recovery is unlikely. While revenues exceeded projections, this positive news is overshadowed by a significant decline in profitability and lower adjusted EBITDA. This suggests serious margin pressure, which investors might penalize more than reward for a minor revenue increase. This could create opportunities to sell call options at prices we see as a ceiling for the stock. Energy service stocks usually show high volatility following mixed earnings reports. We expect implied volatility to stay high as the market processes the disappointing earnings alongside future technology initiatives. In this context, strategies like a straddle, which benefits from significant price shifts in either direction, could be appealing if one is uncertain about the immediate market trend. The collaboration for small modular nuclear reactors is a long-term initiative and won’t affect cash flow in the near term. We will set aside this news in our strategies for the coming weeks and focus on the current weakness in customer activity. The cuts in capital spending, aimed at conserving cash, also indicate a lack of immediate investment opportunities, further reinforcing a cautious or bearish stance. Create your live VT Markets account and start trading now.

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