Commission free trading has made it easier to trade stocks, attracting a lot of people to try it out. The prospect of not having to pay commissions helps maximize the earnings. And just as people look to try the stock market, companies wish to list themselves in it as well. And that’s what an IPO is all about.
IPOs keep coming every now and then. In this Motley Fool article, analysts believe three of these upcoming IPOs are particularly important. What makes these IPOs interesting is their potential for long-term upside. They don’t appear to be just hype.
The IPOs that are exciting these analysts are oil company Saudi Aramco, plant-based meat substitute manufacturer Beyond Meat, and email-substituting messaging software maker Slack Technologies. We’re focusing on the oil company since the transformation in the perspectives of its owners has been the most dramatic.
What Makes Saudi Aramco Sought After?
This Saudi Arabian oil company has been stirring the pot for quite some time. The country owning the company, Saudi Arabia, only has the intention to sell 5% of its company though. But that hasn’t stopped it from setting its valuation at $2 trillion. That means an IPO could fetch it $100 billion, setting a record for the largest IPO in history.
But back when Saudi Arabia publicly discussed this from 2016, the market found it very entertaining. Analyst Matt DiLallo attributes that to the volatility in the oil prices. There also wasn’t any transparency on the oil reserves the country actually has. But the kingdom nation is now changing its perspective since it really is planning on the IPO. An example of that is its collaboration with OPEC for helping to raise the oil prices.
There was also an independent audit conducted, which revealed that it had indeed oil reserves exceeding 260 billion barrels. It also revealed its financials for 2018, showing its net income to be in the region of $111.1 billion. DiLallo reports that this was greater than the profits of Google, ExxonMobil and Apple combined!
Why This IPO Is So Important
The reason behind the company highlighting its financials was to help it raise $10 billion in debt to help it acquire a 70% stake in Sabic, the Saudi Arabian chemicals company. Since there was great demand for that debt, it is an indication that the IPO would garner tremendous interest as well. DiLallo reckons the IPO could happen by 2021. No wonder that the analyst considers this to be one of the most important IPOs to watch out for, just on account of its massive size and profitability.
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