Rude awakening for Aramco’s new share investors.
Reuters that shares of Saudi Aramco opened at 34 riyals ($9.06) on Wednesday, their lowest level since the oil giant began trading on December 11, arecord-breaking stock market debut, and ended down 0.6% compared to Tuesday.
The latest price valued the company at $1.82 trillion, down from a peak of $2.06 trillion on Dec 12, or over $180 billion less.
Blame Iran, or rather the US killing of Iranian General Qasem Solaimani on Jan3, 2020. Now Iran is retaliating when early Wednesday it fired a series of ballistic missiles at two US military bases in Iraq housing American troops. Aramco is right in the middle of this, experts believe.
Aramco investors brace for the worst
The vast majority of investors who participated in the $25.6 billion IPO on December 11 were Saudi individuals, companies and institutions.
Aramco’s stock has dropped roughly 2% since the killing of Quds Force commander Qasem Soleimani, and briefly topped 10% down on Monday, reflecting concerns that Iran could respond to the attack by targeting the oil infrastructure of Saudi Arabia, a key American ally in the region.
Shares have dipped despite a surge in crude oil prices of as much as 6% since Thursday to near $70, which should help boost earnings at the world’s most valuable company.
Investors are worried that Iran, which counts Saudi Arabia among its regional foes, could target the company’s production facilities.
The attacks on Saudi Aramco oil facilities in September caused Brent futures to shoot up $8 in one day and wiped out 50% of oil production for weeks.
The Sept. 14 strikes had targeted the Abqaiq and Khurais plants at the heart of Saudi Arabia’s oil industry, temporarily shutting down 5.7 million barrels per day (bpd) of output – more than 5% of global oil supply.
Or Iran could target Aramco’s computer networks through cyber attacks in retaliation for the killing of Soleimani, according to CNN.
Also, the spike in oil prices may be short lived. If prices start to fall again, that would further pressure Aramco’s stock.
Analysts at Goldman Sachs said in a research note that “oil prices are already trading above our fundamental fair value of $63 a barrel ahead of the recent events.”
Aramco shares are still above the IPO price of 32 riyals ($8.64) that valued the company at $1.7 trillion.
Aramco raised $25.6 billion in its IPO, making it the biggest flotation in the world, exceeding Alibaba Group’s $25 billion deal in 2014.