Predicting Aramco's IPO Long-Term Performance During COVID Times

ABSTRACT

This paper aims to assess whether the outbreak of the highly contagious pandemic had an impact on the share prices of recently listed Aramco in light of the Fads hypothesis using the methods of neural network and ARIMA. The IPO of Aramco, the world's largest oil company, was a much-hyped affair. Given the relevant importance of the company, it was expected that Aramco's share prices would not underperform in the long run. But the analysis indicates the opposite. The study uses two time periods using the announcement of the pandemic by the World Health Organization as the threshold date to see the impact of the pandemic on Aramco's share prices. The forecasting results validate the Fads hypothesis implying that Aramco's share prices would have underperformed in the long run, even in the absence of a pandemic outbreak. Finally, the study cautions investors against the hype created by IPOs. © 2023, The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd.