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Why an IPO now? Saudi Arabia sees a future, not too far off, where there is a sudden drop in demand for oil. Caused by electric cars. In the US, 51% of oil b

Why an IPO now? Saudi Arabia sees a future, not too far off, where there is a sudden drop in demand for oil. Caused by electric cars. In the US, 51% of oil becomes gasoline. https://www.quora.com/How-much-of-the-oil-production-is-consumed-by-cars https://www.quora.com/How-much-of-the-oil-production-is-cons... A DCF model that does not take into account the rise of electric vehicles misses a very important point. The IPO puts money in their pockets NOW based on future predicted profits. That money can be invested into true future technologies: EVs, clean energy, etc. Why the IPO now? The rise of Tesla and BYD maybe? It's still a time when those are mostly unproven and so there are still plenty of skeptics and climate denialists who will buy up Aramco shares.

kobeya 9y ago
Cars are only a small portion of oil use...
- pjc50 9y ago
  "Transport" is most of oil use. Admittedly that includes trucks, ships and planes. http://www.globalpetrolprices.com/articles/39/ http://www.globalpetrolprices.com/articles/39/
  - kobeya 9y ago
    The vast majority of which is trucks, ships and planes.
throw2bit 9y ago
FYI, US is not the only country which have cars. Do not peg everything with whats in US. Its pure solipsism. The demand for oil will rise from developing nations in the near future. Rise of Tesla ? Everywhere else in the world, we havent heard of Tesla. If a company makes it big in the US market, it doesnt mean its a success everywhere else.
Lanthanide 9y ago
It's a lot simpler than that actually; there's just a need for money in the short-term. I can nearly guarantee that this has nothing to do with fears of electric cars or any disruptive tech. The Saudi sovereign wealth fund and other assets have been heavily liquidated and depleted to defray the costs of recent economic pressures, like the gambit against shale oil a couple years ago and the ongoing war costs. The IPO is only one facet; there are new taxes and some austerity measures concerning public sector employees that heavily slashed household incomes for a while, though some of the latter have been reversed recently when cashflow got better. The IPO would would help replenish the sovereign wealth fund and cash reserves, and to help reinstate funding for some public projects that got affected by the downturn (massive nuclear energy projects and public transport infrastructure, for example)
justinterested 9y ago
And, also the fact that more oil would be found as the Artic starts cooling. Most of the Artic is with Russia, Norway and Canada.
justinterested 9y ago
Any DCF model will not directly plug in assumptions. These assumptions impact the Discount Rate (r). Investors look at the same assumptions and may arrive at different Discount Rates.

kobeya 9y ago

Cars are only a small portion of oil use...

pjc50 9y ago
"Transport" is most of oil use. Admittedly that includes trucks, ships and planes. http://www.globalpetrolprices.com/articles/39/ http://www.globalpetrolprices.com/articles/39/
- kobeya 9y ago
  The vast majority of which is trucks, ships and planes.

throw2bit 9y ago

FYI, US is not the only country which have cars. Do not peg everything with whats in US. Its pure solipsism. The demand for oil will rise from developing nations in the near future. Rise of Tesla ? Everywhere else in the world, we havent heard of Tesla. If a company makes it big in the US market, it doesnt mean its a success everywhere else.

Lanthanide 9y ago

It's a lot simpler than that actually; there's just a need for money in the short-term. I can nearly guarantee that this has nothing to do with fears of electric cars or any disruptive tech. The Saudi sovereign wealth fund and other assets have been heavily liquidated and depleted to defray the costs of recent economic pressures, like the gambit against shale oil a couple years ago and the ongoing war costs. The IPO is only one facet; there are new taxes and some austerity measures concerning public sector employees that heavily slashed household incomes for a while, though some of the latter have been reversed recently when cashflow got better. The IPO would would help replenish the sovereign wealth fund and cash reserves, and to help reinstate funding for some public projects that got affected by the downturn (massive nuclear energy projects and public transport infrastructure, for example)

justinterested 9y ago

And, also the fact that more oil would be found as the Artic starts cooling. Most of the Artic is with Russia, Norway and Canada.

justinterested 9y ago

Any DCF model will not directly plug in assumptions. These assumptions impact the Discount Rate (r). Investors look at the same assumptions and may arrive at different Discount Rates.