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Liberty Energy Stock Falls 45% in 6 Months: Time to Hold or Sell?
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Key Takeaways
LBRT cut 2025 CapEx by $75M and plans fewer active fleets, signaling reduced demand and caution.
Share buybacks suspended in Q2 2025 as LBRT prioritizes liquidity and balance sheet strength.
Dependence on North American fracking leaves LBRT exposed to cyclicality and volatile pricing.
Liberty Energy Inc. (LBRT - Free Report) is a North American oilfield services provider specializing in hydraulic fracturing and related completion services for onshore shale producers. The company plays an important role in enabling upstream operators to bring oil and gas wells into production, with a focus on high-efficiency, technology-enabled completions. In recent years, Liberty has also made strategic moves to diversify into power solutions, though the majority of its revenues still comes from its core fracking operations. Despite this central role in the energy value chain, the stock has dramatically underperformed over the past 12 months, plunging 45.4%.
12-Month Stock Performance Overview
Image Source: Zacks Investment Research
This decline is far steeper than the 10.1% drop in the oilfield services sub-industry and well below the broader oil and energy sector, which remained nearly flat at -0.3%. When compared to its direct peers, Liberty’s performance is even more concerning.
Shares of ProPetro Holding (PUMP - Free Report) , Halliburton (HAL - Free Report) and Oceaneering International (OII - Free Report) have lost 40.4%, 30.1% and 12.1%, respectively, yet none matched the severity of LBRT’s decline. This level of underperformance suggests that Liberty may be facing company-specific operational or strategic challenges that go beyond the cyclical pressures impacting the broader market. Understanding the root cause of LBRT’s stock decline requires a close look at the company’s key operational and market pressures.
Factors Contributing to LBRT’s Recent Share Price Decline
Significant Year-Over-Year Earnings Decline Amid Market Softness: This Denver, CO-based oil and gas equipment and services company's financial performance has deteriorated significantly compared to the previous year. For the second quarter of 2025, adjusted Net Income was $20 million, reflecting a stark decline from $103 million in the corresponding quarter of 2024. Similarly, adjusted EBITDA fell to $181 million from $273 million a year ago. This sharp decline can be attributed to softening completion activity across the industry and mounting pricing pressures, indicating that the company's core fracking business is facing a challenging cyclical downturn that may persist.
Exposure to Intensifying Pricing Headwinds in Core Business: LBRT’s management explicitly warned of emerging pricing headwinds that are expected to negatively impact results in the second half of 2025. As customer activity declines and "white space" on the schedule increases, competitors are engaging in what Liberty Energy describes as "unconstructive" pricing behavior. The company anticipates these headwinds to be in the "low single digits" on average across its entire fleet, with older diesel equipment facing even steeper discounts. This pricing erosion will directly compress margins and profitability.
Guidance Withdrawal Signals Elevated Near-Term Uncertainty: A major red flag for investors is management's decision to withdraw its full-year financial guidance. This action highlights the heightened volatility and unpredictability in the current macro environment. Chief financial officer Michael Stock stated, "we are withdrawing our full-year EBITDA target range provided in January," opting to wait for more clarity before providing an update. This lack of forward visibility makes it difficult for investors to model future performance as it also suggests that the company is uncertain about the near-term trajectory of its business.
Planned Reduction in Active Fleet Count and Activity Levels: Due to ongoing market pressures, LBRT plans to slightly scale back the number of active fleets in operation. This is a clear indication of falling demand for its services. While some horsepower will be repositioned to support simul-frac offerings for long-term partners, the overall reduction in active fleets will lead to lower revenue-generating assets. This strategic pullback, while prudent for efficiency, confirms a weakening operational environment and may result in lower absolute revenues and earnings in the coming quarters.
Capital Expenditure Cuts Reflect a Cautious and Diminished Outlook: Liberty Energy reduced its full-year 2025 capital expenditure (CapEx) estimate by $75 million, bringing the new total to approximately $575 million. This fifty-fifty cut between completions and power generation CapEx is a significant indicator of management's cautious stance. The reduction in spending on the core completions business suggests a lack of visible growth opportunities and a focus on preserving cash, while delays in power generation investments could slow the growth of this promising new division.
Cyclical Nature of Oilfield Services Leading to Equipment Attrition: The company highlighted that the anticipated slowdown in activity will "accelerate equipment cannibalization and attrition." In a challenged economic environment, financially strained competitors will part out older equipment for scrap, permanently removing capacity from the market. While this sets up a stronger future rebound, it signifies a deep, destructive phase of the cycle that will pressure the entire industry, including Liberty Energy, in the interim. The company expects the attrition rate to climb into the "mid-teens," a clear sign of industry distress.
High Reliance on a Mature and Volatile Core Fracking Business: Despite its push into power solutions, Liberty remains tied to the highly cyclical U.S. onshore fracking market. Producers are favoring flat production profiles, further dampening service demand. In contrast, diversified peers like Oceaneering International, with exposure to offshore and robotics, have shown more earnings stability, highlighting Liberty's vulnerability due to its concentrated exposure. Volatility in oil prices and upstream CapEx continues to drive inconsistent revenues for pure-play fracking providers.
New Power Business Ventures Have Very Long Gestation Periods: While partnerships like the one with Oklo represent innovative steps into nuclear-powered data centers, they are long-duration projects. Revenues from these alliances aren’t expected until at least 2027, with the nuclear component likely delayed until the early 2030s. Meanwhile, Halliburton, which is also exploring digital and energy transition strategies, is focusing on near-term monetization. LBRT’s long payoff timeline increases execution risk and delays earnings contribution from diversification efforts.
Suspension of Share Buybacks Suggests Cash Preservation Priority: After being an active buyer in previous downturns, Liberty notably refrained from share repurchases in the second quarter of 2025. Management stated that it has elected to "allow a period of assessment" amid market uncertainties. This pause, while conservative, signals that the company prioritizes fortifying its balance sheet and preserving liquidity over returning excess capital to shareholders at a time when the share price may be perceived as attractive, potentially missing an opportunity to increase per-share value.
Integration and Execution Risk in Non-Core Power Business Expansion: The shift in power generation — including natural gas engines and small modular nuclear — introduces new complexities and risks. These include permitting delays, cost overruns, and the challenge of managing unfamiliar technologies. Unlike Halliburton, which has earned decades of experience in adjacent verticals like digital and automation, Liberty's lack of track record in utilities raises concern. The execution burden could weigh on performance if integration issues arise or market adoption is slower than expected.
Bottom Line: Avoid LBRT Stock at Present
This Zacks Rank #4 (Sell) company is facing a confluence of financial and operational challenges, including a sharp year-over-year earnings decline and mounting pricing pressures in its core fracking business. The company has withdrawn its full-year guidance, reduced its active fleet, and cut capital expenditures, all of which signal a cautious outlook and weakening demand. Despite its push into power solutions, these ventures have long monetization timelines and carry significant execution risk, while the core business remains highly cyclical and exposed to market volatility. The suspension of share buybacks further highlights a shift toward cash preservation amid uncertainty.
Image: Shutterstock
Liberty Energy Stock Falls 45% in 6 Months: Time to Hold or Sell?
Key Takeaways
Liberty Energy Inc. (LBRT - Free Report) is a North American oilfield services provider specializing in hydraulic fracturing and related completion services for onshore shale producers. The company plays an important role in enabling upstream operators to bring oil and gas wells into production, with a focus on high-efficiency, technology-enabled completions. In recent years, Liberty has also made strategic moves to diversify into power solutions, though the majority of its revenues still comes from its core fracking operations. Despite this central role in the energy value chain, the stock has dramatically underperformed over the past 12 months, plunging 45.4%.
12-Month Stock Performance Overview
Image Source: Zacks Investment Research
This decline is far steeper than the 10.1% drop in the oilfield services sub-industry and well below the broader oil and energy sector, which remained nearly flat at -0.3%. When compared to its direct peers, Liberty’s performance is even more concerning.
Shares of ProPetro Holding (PUMP - Free Report) , Halliburton (HAL - Free Report) and Oceaneering International (OII - Free Report) have lost 40.4%, 30.1% and 12.1%, respectively, yet none matched the severity of LBRT’s decline. This level of underperformance suggests that Liberty may be facing company-specific operational or strategic challenges that go beyond the cyclical pressures impacting the broader market. Understanding the root cause of LBRT’s stock decline requires a close look at the company’s key operational and market pressures.
Factors Contributing to LBRT’s Recent Share Price Decline
Significant Year-Over-Year Earnings Decline Amid Market Softness: This Denver, CO-based oil and gas equipment and services company's financial performance has deteriorated significantly compared to the previous year. For the second quarter of 2025, adjusted Net Income was $20 million, reflecting a stark decline from $103 million in the corresponding quarter of 2024. Similarly, adjusted EBITDA fell to $181 million from $273 million a year ago. This sharp decline can be attributed to softening completion activity across the industry and mounting pricing pressures, indicating that the company's core fracking business is facing a challenging cyclical downturn that may persist.
Exposure to Intensifying Pricing Headwinds in Core Business: LBRT’s management explicitly warned of emerging pricing headwinds that are expected to negatively impact results in the second half of 2025. As customer activity declines and "white space" on the schedule increases, competitors are engaging in what Liberty Energy describes as "unconstructive" pricing behavior. The company anticipates these headwinds to be in the "low single digits" on average across its entire fleet, with older diesel equipment facing even steeper discounts. This pricing erosion will directly compress margins and profitability.
Guidance Withdrawal Signals Elevated Near-Term Uncertainty: A major red flag for investors is management's decision to withdraw its full-year financial guidance. This action highlights the heightened volatility and unpredictability in the current macro environment. Chief financial officer Michael Stock stated, "we are withdrawing our full-year EBITDA target range provided in January," opting to wait for more clarity before providing an update. This lack of forward visibility makes it difficult for investors to model future performance as it also suggests that the company is uncertain about the near-term trajectory of its business.
Planned Reduction in Active Fleet Count and Activity Levels: Due to ongoing market pressures, LBRT plans to slightly scale back the number of active fleets in operation. This is a clear indication of falling demand for its services. While some horsepower will be repositioned to support simul-frac offerings for long-term partners, the overall reduction in active fleets will lead to lower revenue-generating assets. This strategic pullback, while prudent for efficiency, confirms a weakening operational environment and may result in lower absolute revenues and earnings in the coming quarters.
Capital Expenditure Cuts Reflect a Cautious and Diminished Outlook: Liberty Energy reduced its full-year 2025 capital expenditure (CapEx) estimate by $75 million, bringing the new total to approximately $575 million. This fifty-fifty cut between completions and power generation CapEx is a significant indicator of management's cautious stance. The reduction in spending on the core completions business suggests a lack of visible growth opportunities and a focus on preserving cash, while delays in power generation investments could slow the growth of this promising new division.
Cyclical Nature of Oilfield Services Leading to Equipment Attrition: The company highlighted that the anticipated slowdown in activity will "accelerate equipment cannibalization and attrition." In a challenged economic environment, financially strained competitors will part out older equipment for scrap, permanently removing capacity from the market. While this sets up a stronger future rebound, it signifies a deep, destructive phase of the cycle that will pressure the entire industry, including Liberty Energy, in the interim. The company expects the attrition rate to climb into the "mid-teens," a clear sign of industry distress.
High Reliance on a Mature and Volatile Core Fracking Business: Despite its push into power solutions, Liberty remains tied to the highly cyclical U.S. onshore fracking market. Producers are favoring flat production profiles, further dampening service demand. In contrast, diversified peers like Oceaneering International, with exposure to offshore and robotics, have shown more earnings stability, highlighting Liberty's vulnerability due to its concentrated exposure. Volatility in oil prices and upstream CapEx continues to drive inconsistent revenues for pure-play fracking providers.
New Power Business Ventures Have Very Long Gestation Periods: While partnerships like the one with Oklo represent innovative steps into nuclear-powered data centers, they are long-duration projects. Revenues from these alliances aren’t expected until at least 2027, with the nuclear component likely delayed until the early 2030s. Meanwhile, Halliburton, which is also exploring digital and energy transition strategies, is focusing on near-term monetization. LBRT’s long payoff timeline increases execution risk and delays earnings contribution from diversification efforts.
Suspension of Share Buybacks Suggests Cash Preservation Priority: After being an active buyer in previous downturns, Liberty notably refrained from share repurchases in the second quarter of 2025. Management stated that it has elected to "allow a period of assessment" amid market uncertainties. This pause, while conservative, signals that the company prioritizes fortifying its balance sheet and preserving liquidity over returning excess capital to shareholders at a time when the share price may be perceived as attractive, potentially missing an opportunity to increase per-share value.
Integration and Execution Risk in Non-Core Power Business Expansion: The shift in power generation — including natural gas engines and small modular nuclear — introduces new complexities and risks. These include permitting delays, cost overruns, and the challenge of managing unfamiliar technologies. Unlike Halliburton, which has earned decades of experience in adjacent verticals like digital and automation, Liberty's lack of track record in utilities raises concern. The execution burden could weigh on performance if integration issues arise or market adoption is slower than expected.
Bottom Line: Avoid LBRT Stock at Present
This Zacks Rank #4 (Sell) company is facing a confluence of financial and operational challenges, including a sharp year-over-year earnings decline and mounting pricing pressures in its core fracking business. The company has withdrawn its full-year guidance, reduced its active fleet, and cut capital expenditures, all of which signal a cautious outlook and weakening demand. Despite its push into power solutions, these ventures have long monetization timelines and carry significant execution risk, while the core business remains highly cyclical and exposed to market volatility. The suspension of share buybacks further highlights a shift toward cash preservation amid uncertainty.
Unless the company shows improved financial results and greater operational stability, investors may be better off exploring other opportunities in the oil and gas sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.