Saudi state-owned oil giant Saudi Aramco is set to become a "polarizing stock," with analysts flagging corporate governance as a key risk for investors.
The Saudi royal family "calls all the shots," pointed out Pavel Molchanov, an energy analyst at investment bank Raymond James.
"How do we invest in a company that ... is 98% owned by the Saudi government, where the Saudi royal family calls all the shots? It does not matter what independent investors or independent board members think, frankly," he told CNBC's "Squawk Box" on Thursday.
Saudi Aramco, the world's largest initial public offering (IPO), debuted on the country's stock exchange on Wednesday morning.
Aramco's debut, which listed 1.5% of its shares locally on the Saudi Tadawul, is the biggest on record — topping the $25 billion Alibaba raised when it went public in September 2014.
Saudi Aramco eventually plans to list on international exchanges, said Molchanov. But even if that brings in more foreign money, those governance and geopolitical risks mean that it's "not for everybody," he added.
"It is a very unique, very special situation. Quite a polarizing stock, frankly. Some people love it, and some people will never own it," he said.
Geopolitical risks include instability in the region, with Molchanov flagging the attacks on Saudi Aramco oil facilities in September that shut down half the kingdom's total oil production.
John Driscoll, chief strategist at JTD Energy Services, said that incident "highlighted the vulnerability of the infrastructure."
"Although the Saudis did recover, that becomes a concern. And then just general Mid East geopolitics and the potential for upheavals and dislocations, that gets factored in," he said.
Meanwhile, Bernstein initiated coverage on Aramco with an "underperform" rating and a price target of 25.5 riyals per share. That represents a more than 27% decline from its Wednesday closing price of 35.20 riyals a share.
The stock had surged 10%, hitting the daily limit, in its first day of trading.
Bernstein analysts in their note also flagged the corporate governance issue as a risk.
"Aramco should trade at a discount rather than premium to international oil majors. Corporate governance has been identified as the key risk for investors, given that the (Kingdom of Saudi Arabia) will continue to own >98% of Aramco," they wrote.
— CNBC's Natasha Turak and Eustance Huang contributed to this report.