NOV Plunges 10.03%—What’s Behind the Sharp Selloff?

Summary
• NOV shares cratered 10.03% intraday, trading at $12.74 as of 17:17 ET.
• Q2 2025 earnings revealed a 57% year-over-year drop in new orders and a 1-3% Q3 revenue decline outlook.
• Energy Products and Services segment margin contracted 330 bps to 14.2%, while Energy Equipment backlog fell 3% sequentially.

NOV’s sharp selloff reflects a perfect storm of weak guidance, declining orders, and sector headwinds. With intraday lows at $12.66 and a 52-week low of $10.84 looming, the stock faces critical support levels. Investors are now parsing whether management’s capital return strategy can offset near-term operational challenges.

Q2 Guidance and Order Decline Fuel Panic
NOV’s 10.03% intraday drop stems from a stark disconnect between sequential revenue growth and deteriorating forward indicators. While Q2 revenue rose 4% to $2.2 billion, new orders collapsed 57% year-over-year to $420 million, with a book-to-bill ratio of just 66%. Management’s Q3 guidance—projecting a 1-3% revenue decline—exacerbated concerns about future demand. The Energy Products and Services segment’s 330-basis-point margin contraction to 14.2% highlighted pricing pressures and cost headwinds, including tariffs and a less favorable sales mix.

Oil & Gas Equipment Sector Weakness Amplifies Pain
NOV’s selloff aligns with broader sector struggles. Schlumberger (SLB) fell 2.04% intraday, signaling sector-wide caution. Both firms face similar challenges: declining U.S. shale activity, offshore project delays, and margin compression. NOV’s international revenue focus (62% of total) contrasts with SLB’s 30% U.S. exposure, yet both are vulnerable to a slowdown in offshore and international markets. The sector’s 23% year-to-date underperformance in the S&P 500 underscores the market’s skepticism about near-term recovery.

Options Playbook for NOV’s Volatile Near-Term Outlook
• RSI: 59.59 (neutral)
• MACD: 0.2009 (bullish divergence)
• 200D MA: $14.24 (current price at -12.5%)
• Bollinger Bands: 12.27–14.20 (price near lower band)

NOV’s technicals suggest a bearish setup with potential for a rebound from key support. The 200D MA at $14.24 acts as a critical resistance, while the lower Bollinger Band at $12.27 offers a short-term floor. Traders should monitor the 13.23 middle band as a pivot level.

Top Options Picks:
1. NOV20250815P13 (Put, $13 strike, Aug 15):
• IV: 37.37% (moderate)
• Leverage: 23.21% (high)
• Delta: -0.5678 (sensitive to price)
• Theta: -0.0068 (slow decay)
• Turnover: 4,260 (liquid)
• Payoff at 5% down: $0.63 (max(0, 13 - 12.10))
• Rationale: High leverage and moderate IV make this put ideal for capitalizing on a breakdown below $13.
2. NOV20250815C13 (Call, $13 strike, Aug 15):
• IV: 45.37% (moderate)
• Leverage: 31.13% (high)
• Delta: 0.4488 (moderate sensitivity)
• Theta: -0.0158 (accelerated decay)
• Turnover: 1,852 (liquid)
• Payoff at 5% down: $0.00 (max(0, 12.10 - 13))
• Rationale: A high-leverage call for aggressive bulls expecting a rebound above $13.23.
Action: Aggressive short-sellers may target NOV20250815P13 for a breakdown below $12.70.

Backtest NOV Stock Performance
The backtest of NOV's performance after an intraday plunge of -10% shows promising results. The strategy achieved a 101.31% return, significantly outperforming the benchmark return of 44.79%. The excess return was 56.52%, with a CAGR of 46.83%. The strategy had a maximum drawdown of 0.00%, indicating it effectively managed risk, and a Sharpe ratio of 1.71, suggesting good risk-adjusted returns.

NOV’s Crossroads: Capital Returns vs. Operational Challenges
NOV’s selloff reflects a clash between its capital return strategy and deteriorating operational metrics. While the company plans to return 50% of free cash flow to shareholders, weak order growth and Q3 guidance signal near-term pain. Investors should watch the 13.23 middle Bollinger Band as a pivot—break below $12.70 could trigger a test of the 52-week low. Schlumberger’s 2.04% decline highlights sector-wide fragility, reinforcing the need for caution. For now, NOV20250815P13 offers a leveraged play on further downside, but a rebound above $13.23 could reinvigorate the stock’s technical narrative.