Home » Stocks & Shares » Saudi Aramco sheds $200 billion off its value since IPO

Saudi Aramco sheds $200 billion off its value since IPO

Damian Wood
  • January 8th, 13:22
  • Last Updated: January 8th, 13:23
  • 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.

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.

About the author

Damian Wood
Damian Wood
As an experienced trader, I work for myself managing my own small portfolio and also contributing on several investment news sites. I mix my passion for the industry and journalism to bring my readers informative and trustworthy articles.

Leave a Reply

Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.