Since the world’s first initial public offering (IPO) – the Dutch East India Company in 1602 – public listings have been crucial for companies and investors throughout history as the practice allows privately held firms the chance to offer equity stakes to the public in order to raise capital.
In 2014, Alibaba’s $25 billion debut on the New York Stock Exchange became the world’s largest-ever IPO to date. The landmark IPO caught the attention of American investors and consumers, a difficult feat for a company that had most of its operations in China.
Today, another giant is gearing up to make its debut on a global stock exchange.
Saudi Arabia’s state-owned oil company Saudi Aramco, the world’s most profitable company, is set to float a five percent stake to raise $100 billion – a figure which would make it the world’s largest IPO and give the oil giant a valuation of nearly $2 trillion. In comparison, both Apple and Amazon have a combined market cap of about $1.9 trillion, based on their last close on the Nasdaq Stock Market.
For Saudi Arabia, the public listing of its biggest company is not just an opportunity to raise money, but also a chance to reinvent itself as a global investment destination.
While investors can only speculate on the outcome of Aramco’s ambitious IPO, a look at some well-known listings from the past can help indicate what lies ahead.
IPOs can provide huge boosts to a company – such as Ford Motor’s in 1956 and Apple’s in 1980 – others such as Facebook’s 2012 IPO have been less successful. In many cases, owners have pulled the plug on their company’s IPO plans due to concerns over valuation and the broader markets.
This year, WeWork expected to gain a valuation of $47 billion for its planned IPO. However, concerns over its mounting losses and mismanagement by its CEO forced the office-sharing startup to cut its valuation to a range of $10 billion to $12 billion. The listing was eventually scrapped amid pressure from its biggest investor SoftBank.
Al Arabiya English looks at ten of the most important IPOs to date, and their impact.
1) Henry Ford
In 1956, Henry Ford took Ford Motor Co public. Over 10 million shares of Ford stock were made available on the open market at a price of $64.50 per share, giving the company a valuation of about $657 million or around $28 billion in today’s equivalent.
When Apple launched its IPO in 1980, the company sold 4.6 million shares at $22 apiece. The IPO generated more capital than any listing since Ford and created about 300 millionaires, including Apple employees and investors.
Microsoft went public in 1986 for $21 per share, higher than the price many on Wall Street expected the software company to command. Unlike most unicorns – companies with a value of over $1 billion – today, Microsoft was already a profitable company at the time of its debut.
4) Japan’s NTT DoCoMo
Japan’s NTT DoCoMo made its stock exchange debut in 1998, a year after the Asian financial crisis. The telecom operator’s initial public offer of JPY 2.13 trillion, or more than $18 billion, made it the world’s biggest IPO at the time.
5) General Motors
Iconic US automaker General Motors Co raised more than $20 billion during its debut in 2010. The overwhelming response showed investors’ growing confidence in the Detroit-based company after an unpopular taxpayer-funded bankruptcy in 2009.
In 2012, Facebook became the first American technology firm to debut on Wall Street with a valuation of more than $100 billion. However, the hotly anticipated IPO was fraught with technical issues and the company’s stock suffered a market-wide selloff that erased nearly all its gains by the closing bell.
Alibaba’s 2014 blockbuster IPO gave the Chinese tech company a valuation of $230 billion. In the following years, several Chinese companies followed Alibaba’s example and bypassed Hong Kong to raise billions of dollars on American stock markets.
8) Snap Inc
In 2017, shares of Snap Inc, the owner of Snapchat, surged on debut and gave the company a valuation of about $28 billion, indicating that investors had largely shrugged off concerns about the app’s slowing user growth. Snap, which has since struggled amid competition from Instagram, is currently valued at $18.65 billion.
Earlier this year, Lyft became the first ride-hailing cab service to debut on Wall Street, raising $2.6 billion and achieving a valuation of more than $20 billion.
Uber’s IPO in May was the most widely anticipated offering since Facebook’s 2012 listing. However, shares of the world’s biggest ride-hailing cab service fell on debut, partially hurt by investor concerns over the company’s ability to turn a profit.