Texas Pacific Land Stock Drop Looks Sharp, But How Deep Can It Go?

Texas Pacific Land (TPL) stock is down 16.5% in 21 trading days. The recent slide reflects renewed concerns around missed earnings and declining commodity prices, but sharp drops like this often raise a tougher question: is the weakness temporary, or a sign of deeper cracks in the story?

Before judging its downturn reslience, let’s look at where Texas Pacific Land stands today.

• Size: Texas Pacific Land is a $19 Bil company with $772 Mil in revenue currently trading at $838.64.
• Fundamentals: Last 12 month revenue growth of 12.5% and operating margin of 75.8%.
• Liquidity: Has Debt to Equity ratio of 0.0 and Cash to Assets ratio of 0.35
• Valuation: Texas Pacific Land stock is currently trading at P/E multiple of 45.0 and P/EBIT multiple of 36.7
• Has returned (median) 21.5% within a year following sharp dips since 2010. See TPL Dip Buy Analysis.

These metrics point to a Strong operational performance, alongside Very High valuation – making the stock Relatively Expensive. For details, see Buy or Sell TPL Stock

That brings us to the key consideration for investors worried about this fall: how resilient is TPL stock if markets turn south? This is where our downturn resilience framework comes in. Suppose TPL stock falls another 20-30% to $587 – can investors comfortably hold on? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns, based on (a) how much the stock fell and, (b) how quickly it recovered. Below, we dive deeper into each such downturn.

2022 Inflation Shock

• TPL stock fell 52.8% from a high of $905.02 on 7 November 2022 to $427.55 on 23 June 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 19 September 2024
• Since then, the stock increased to a high of $1,730.00 on 24 November 2024 , and currently trades at $838.64

 
2020 Covid Pandemic

• TPL stock fell 62.4% from a high of $273.12 on 8 January 2020 to $102.78 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 11 January 2021

 
2018 Correction

• TPL stock fell 50.5% from a high of $290.66 on 3 October 2018 to $144.00 on 21 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 10 April 2019

 
2008 Global Financial Crisis

• TPL stock fell 73.2% from a high of $20.50 on 29 June 2007 to $5.50 on 9 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 21 March 2013

 
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