Dubai – The Middle East’s red-hot IPO streak is showing signs of cooling as several newly listed companies struggle to meet earnings expectations, sparking renewed scrutiny over valuations and corporate transparency.
After a blockbuster run of public offerings across the UAE and Saudi Arabia, high-profile names such as Lulu Retail Holdings Plc and Nice One Beauty Digital Marketing Co. have faltered in early post-listing trade, raising concerns among institutional and retail investors alike.
Lulu Retail Holdings—backed by global investment powerhouses including Singapore’s GIC—has seen its shares plunge more than 33% since its listing in late 2024, following a disappointing earnings report in February. As the UAE’s second-largest IPO of last year, the company's sharp decline is being closely watched as a barometer of broader market sentiment.
Meanwhile, Saudi Arabia’s Nice One Beauty, a digital-first cosmetics retailer, has lost the bulk of its opening-day surge, weighed down by missed revenue and profit targets in its initial financial disclosure as a public entity.
“It is clear that the market has become more sensitive to valuations and will punish accordingly names that don’t deliver on their guidance,” said Rami Sidani, Head of Frontier Investments at Schroder Investment Management.
Transparency Gap Raises Red Flags
Industry observers point to more than just earnings disappointments. The lack of structured communication between firms and the investor community is also exacerbating the declines. According to experts, insufficient investor engagement and an underdeveloped investor relations (IR) framework are hampering post-IPO confidence.
“Some companies are rushing into IPOs without even setting up a proper investor relations team,” said Paolo Casamassima, CEO of the Middle East Investor Relations Association. “The best practice would be to begin building that function a year before listing. You need time to understand internal dynamics and prepare for stakeholder engagement.”
Casamassima noted that some firms are opting out of holding investor calls due to concerns over facing tough questions. A lack of sell-side analyst coverage has further discouraged long-term institutional investors, leading to a shareholder base dominated by short-term retail participants.
“You end up with investors who may exit at the first sign of volatility, instead of those willing to back the company’s growth trajectory,” he added.
Communication Makes the Difference
Not all companies are stumbling. Market experts cite firms like Dubai’s toll operator Salik Co. PJSC and parking management firm Parkin Co. PJSC as examples of companies that have fostered strong investor communication strategies, resulting in higher trading volumes and greater post-listing stability.
“There’s no such thing as too much information when it comes to a listed company,” said Sameer Lakhani, Managing Director at Global Capital Partners. “Investors want clarity, and the names that provide consistent updates are gaining credibility and traction.”
With IPO pipelines still active across the region, analysts suggest that investor education, transparent reporting, and robust IR functions will be vital for sustaining long-term interest.
As Gulf markets continue to mature and attract global capital, the message is increasingly clear: in today’s environment, missing earnings is only part of the problem—keeping investors in the dark may be an even costlier mistake.
