Will it last? World’s first $2 trillion company

Saudi Aramco shareholders had yet another bullish trading day on
Friday when the company’s shares closed off with a 4.55% gain. The Saudi
government-owned oil firm on Thursday hit the $2-trillion mark after gaining
about $300 billion in market value, adding to its already $1.7-trillion
valuation.

The oil producer goes down in history as the first company to hit
the two trillion-dollar mark in valuation, with distance rivals Apple and
Amazon barely hanging on to the one-trillion bar.

Aramco’s stock gained 10% on two consecutive days before jumping 4.55%
on Friday.

The Riyadh stock
exchange-listed company marked its first trading on Wednesday, gaining about
10% after issuing the world’s
biggest initial public offering since Alibaba’s 2014 IPO.

Aramco, now the most
valuable company, recorded a lot of buys from its home country, Saudi Arabia. According
to a Tuesday statement by Samba Capital, one of the oil producer’s underwriters,
about 97% of the subscriptions came from Saudi Arabia, with only 3% being
foreign investors.

Saudi prince’s
initial $2-trillion valuation
had been thwarted by critics, but it seems he will now have a field
day seeing as hardly a week later, he has achieved his widely-protested valuation.

Bernstein
Research analysts last week were quick to note that it was “too much, too soon”
for the market to place a $2-trillion valuation tag on the oil company, with earnings
growth expected to stall coupled minimal crude oil price gains.

They stated said
that the company looked “expensive” compared to its rivals, Exxon (XOM) and Royal
Dutch Shell (RDSA).

“Aramco
should trade at a discount rather than premium to international oil majors. The
kingdom still owns more than 98% of the company, they noted, suggesting that
investors should be concerned about corporate governance. Bernstein reckons the
company is worth as little as $1.4 trillion,” Bernstein Research experts said.

“Aramco
could trade in a league of its own for some time, but the stock market is a
weighing machine in the long term, and the laws of economic gravity will
eventually apply,” they added, recommending selling Aramco shares.