Sorry, no Saudi Aramco shares for you

by | Nov 19, 2019 | Editorial, IPO Corner | 0 comments

Who would’ve thought the hottest company in the game won’t be offered on the coveted New York Stock Exchange (NYSE)?

In fact, Saudi Aramco gave foreign investors (American, Canadian, European, and Japanese) a snub. Aramco is solely relying on the ultra-wealthy locals… and many have been pressured to invest.

Right now, banks in Saudi Arabia are making lending extremely easy so locals could purchase more shares.

It’s quite clear this isn’t a good sign… and this action is not typical for a company looking to go public.

So why did Saudi Aramco decide to keep foreign investors out… and will we ever be able to trade one of the most valuable companies in the world?

The Next Move for Saudi Aramco

Saudi Aramco had a tough time drumming up hype around its IPO, despite the fact the Crown Prince was calling for a $2T… but Wall Street investors know that number is inflated…

I mean come on, Saudi Aramco would instantly be worth more than Apple (AAPL) if it went public on NYSE… and they decided to shun us, investors and traders, out.

That actually is a good thing for us because it actually seems like practice for them…

You see, my take is that the company is trying to figure out whether people actually want a piece of the company… or if people will just dump shares… and there’s no better way to do that than limit investments just to local investors (those domiciled in Saudi Arabia).

However, that doesn’t mean Saudi Aramco won’t be available for us to trade down the road.

Here’s what could happen with the IPO:

  • If Saudi Aramco has a stellar debut, the company may look to list shares on NYSE or Nasdaq.
  • If demand is weak for shares, it wouldn’t be surprising for the company to just keep foreign investors out.
  • If the IPO is successful, Saudi Aramco could directly list shares and forgo the standard IPO process.

Right now, I’m focused on the latter because that’s the course of action that makes the most sense.


Direct Listing Imminent for Saudi Aramco?


If you don’t know what a direct listing is… it’s pretty simple.

There are no investment bankers or institutions facilitating the trade, so it’s truly based on the supply and demand of the people.

Instead of Saudi Aramco relying on banks to take orders and build an order book… a direct listing allows the company to just list stock on a major exchange… and the early investors could dump their shares on new ones.

Not only that, but there’s no “lockup” in a direct listing… which is great for the insiders because that means they could sell whenever they’re comfortable with taking profits.

We’ve already seen Saudi Arabian officials tell bankers they’re disappointed with the foreign demand for Saudi Aramco… pressuring the company ahead of a roadshow.

Whatever Saudi Aramco does, I’ll be ready… if it actually chooses to IPO or directly list on NYSE or Nasdaq, I will develop a plan and attack accordingly.