Saudi Aramco falls for the first time since its record-breaking IPO, putting a halt to its 4-day run

FILE PHOTO: Workers are seen at the damaged site of Saudi Aramco oil facility in Abqaiq

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FILE PHOTO: Workers are seen at the damaged site of Saudi Aramco oil facility in Abqaiq
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Reuters
  • Saudi Aramco sank for the first time since its record-breaking initial public offering, closing about 0.7% lower on Tuesday.
  • The company’s stock was first offered for 32 riyals ($8.53) per share on December 10, and is still up about 18% from its IPO price.
  • The drop comes just one day before Aramco’s inclusion in the MSCI Emerging Markets Index. The index serves as a foundation for several passive investment vehicles, and the oil company’s addition is set to drive increased demand from funds tracking MSCI.
  • Watch Aramco trade live here.

Saudi Aramco fell for the first time since its record-shattering initial public offering, closing roughly 0.7% lower on Tuesday after rising for four days.

Aramco closed at 37.75 riyals ($10.06) per share Tuesday on Saudi Arabia’s Tadawul exchange. The company’s stock was first offered for 32 riyals ($8.53) on December 10, and is still up about 18% from its IPO price.

The drop comes just one day before Aramco’s inclusion in the MSCI Emerging Markets Index. The influential index serves as a foundation for several passive investment vehicles, and the company’s addition will likely spur increased demand as funds tracking the MSCI index buy up shares.

Aramco will also join the Tadawul index on Wednesday and the FTSE benchmark on Thursday. The oil giant’s inclusion in the MSCI index can draw as much as $710 million in inflows, Reuters reported, citing a note by Dubai-based Arqaam Capital. Its addition to the FTSE can yield roughly $400 million in demand, Reuters added.

Despite Tuesday’s tumble, Aramco still boasts a market value above $2 trillion. Crown Prince Mohammed bin Salman initially planned to offer the company’s shares at that valuation, but the company’s IPO ended up reflecting a $1.7 trillion valuation after analysts balked at the lofty goal.

Aramco closed 10% higher after its first day of trading on December 11. The firm surpassed the $2 trillion threshold in its second day of trading.

Aramco has a 31.57 riyals ($8.42) consensus price target from the three analysts covering the firm, according to Bloomberg data.

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Markets Insider