Investors in Aradel Holdings Plc, Nigeria’s newest listed company, have seen a total loss of N208bn just two days after the company’s shares debuted on the Nigerian Exchange Limited (NGX).
The company’s stock fell by 5.85 per cent, reducing its market capitalization from N3.562trn on Tuesday to N3.354trn by the close of trading on Wednesday.
This significant drop contributed to a broader sell-off in the domestic market.
Aradel Holdings, an integrated energy company, listed 4.34 billion shares on the NGX Main Board on October 14, 2024, through a “Listing by Introduction.”
The shares were initially priced at N702.69 per share, boosting NGX’s market capitalization by N3.05trn.
This marked a major milestone in the oil and gas sector’s participation in Nigeria’s stock market.
Following the listing, Aradel’s share price saw an initial surge, rising by 10 per cent on Monday to close at a market capitalization of N3.36trn. By Tuesday, the stock gained another 6 per cent, bringing the company’s value to N3.56trn.
However, the momentum shifted by Wednesday as investors began selling off their shares. Aradel’s stock price dropped sharply, closing at N720 per share, down from N820 per share at the start of the day’s trading.
This N48 per share decline triggered a 0.25 per cent drop in the All-Share Index, bringing it down to 98,291.53 points.
The sharp decline in Aradel Holdings’ stock price has raised concerns among investors, highlighting cautious sentiment in the market.
This comes amid ongoing uncertainties in the broader economic environment, which continue to influence market trends.
Analysts have pointed out that while Aradel’s listing initially brought excitement, the decline in share price underscores the importance of investor caution.
Given the challenges the domestic bourse is facing, experts advise shareholders to closely monitor the overall market sentiment. While the company’s fundamentals in the energy sector remain promising, investors must weigh these against the broader risks in the market.
However, Chief Operating Officer of Investdata Consulting Limited Ambrose Omorodion in a chat with NewsNGR said the development reflects an increase in the number of shares due to the share split.
He noted that the split has provided shareholders with additional shares, allowing them to realize profits.
“At the new price level, many shareholders are taking profits. Additionally, it seems the stock may have been overpriced by the market or management, having been listed at N702.
“The rally over the two days was expected before today’s correction. However, this doesn’t change the company’s strong fundamentals.
“Aradel Holdings maintains impressive corporate governance, and the market is looking forward to the company’s third-quarter results. There’s a strong possibility of an interim dividend, depending on management’s decisions,” he said.
The performance of Aradel Holdings will likely continue to be a key focus in the coming weeks as investors assess whether this dip signals a short-term market correction or points to deeper concerns about the company’s long-term prospects.
On the overall performance, bearish sentiments dominated the market, primarily driven by profit-taking in Aradel (-5.85 per cent) and significant selloffs in Okomu Oil (-6.86 per cent) and Nestle (-2.25 per cent).
These declines outweighed gains from Dangote Sugar (+9.69 per cent) and Oando (+3.99 per cent), as 23 laggards edged out 22 gainers. Deap Capital (+10.00 per cent) led the gainers’ chart, while Custodian (-8.98 per cent) topped the list of decliners.