By Henry Nweze
Before we get carried away by the excitement around the forthcoming Dangote Petroleum Refinery IPO, it is important to look at what previous major listings have taught Nigerian investors.
One of the biggest examples is MTN Nigeria.
MTN Nigeria was listed on the Nigerian Exchange (NGX) in 2019 at N90 per share through a listing by introduction. The stock later traded above its listing price, showing that a strong company can create value beyond its initial listing.
Then there was Airtel Africa.
Airtel Africa’s IPO was priced at N363 per share. When the company began trading on the Nigerian Exchange in July 2019, the stock immediately rose by 10%, closing its first trading day at N399.30.
You would have thought the stock was going to keep going up.
But something interesting happened.
Just a few days later, the excitement had faded. By the end of its first week, Airtel Africa had fallen to N323.50, below its original IPO price of N363.
This teaches us an important lesson:
A stock rising on its first day does not mean it will continue rising.
Investor excitement, demand, and market sentiment can push a newly listed stock up quickly, just as it happened with spaceX IPO, but it crashed down within two weeks.
So, don’t buy an IPO simply because it is a big name.
A strong company can still be overpriced.
A popular IPO can still fall after listing.
And a stock that doesn’t immediately shoot up can still become a good long term investment.
This is why, as we approach the Dangote Refinery IPO, don’t focus only on what happens on listing day.
Don’t make the mistake of thinking:
“If it rises on the first day, I have made it.”
The real investment journey starts after the excitement.
Because the goal is not simply to make money on listing day.
The goal is to own a good business at a reasonable price and allow it to create value over time.
So, look at the business, valuation, financial performance, risks, and long term growth potential.
Because the real question is not:
“How will the stock perform on the first day?”
The real question is:
“What will this company be worth years from now?”
