Saudi Aramco sheds $200 billion off its value since IPO

Saudi Aramco sheds $200 billion off its value since IPO
Written by:
Damian Wood
8th January, 13:22
Updated: 11th March, 09:12
  • Aramco is currently trading at its all-time low after making an impressive 10% jump on its first trading day on Dec 11.
  • The drop in Aramco’s shares comes at a period when crude oil prices are surging globally.
  • More than 90% of investors in the company are from Saudi Arabia and the neighbouring nations.

It’s hardly been over a month since oil giant Saudi Aramco floated its mega IPO that was oversubscribed by about 2.95 times. But the Saudi government entity has hit the headlines again, this time around due to its dwindling fortunes.

Aramco, which opted to list on Saudi Arabia’s local exchange, Tadawul, is currently trading at its all-time low after making an impressive 10% jump on its first trading day. Investors have been bracing themselves for huge dips especially for Middle East stocks following last week’s killing of Iranian commander Qasem Soleimani in a US airstrike.

Fears of further revenge by Iran targeting Saudi oil reserves keep hovering over the markets, destabilising an American ally in the region.

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The drop in Aramco’s shares comes at a period when crude oil prices are surging globally, a fact that ought to have boosted the firm’s shares. Saudi is home to some of the world’s largest oil reserves and is an oil-dependent nation, although it has been fighting to change that narrative with its ambitious diversification plan.

Since last month’s peak, Aramco’s shares have been plunging, and by yesterday evening, a fortune $200 billion had been wiped off the company’s equity.

Iran has for a while now considered Saudi Arabia a foe and if the ongoing tension escalates further, the oil-producing nation’s reserves could be a target for Iran.

Another possible avenue for Iran to attack the kingdom is through cyberattacks, a crime that the country is famed for. Iran’s cyber skills have been linked to attacks on some of the world’s largest banks, including Bank of America, JP Morgan Chase, and Wells Fargo.

In 2012, Saudi faced one of the worst attacks in its history when data in more than 35,000 computers was wiped out by attackers that were believed to be Iranians.

 Dubai-based head of equity strategy at Tellimer Hasnain Malik noted that the prosperity of Aramco would largely depend on the support it enjoys from its regional neighbours.

More than 90% of the investors in Aramco’s $25.6 billion IPO were either local or from other Middle East countries.

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