Aramco Becomes the World's Most Valuable Company, Beating Apple

 

Aramco Becomes the World's Most Valuable Company, Beating Apple


Aramco Becomes the World's Most Valuable Company, Beating Apple


Aramco, Saudi Arabia’s state-owned oil company, has knocked Apple off its long-held position as the world’s most valuable company by market capitalization.


The new king

According to Fortune magazine’s annual list of largest companies by revenue—specifically, their Global 500 list —the most valuable company in the world today is Saudi Aramco. This oil behemoth actually beat out tech giant Apple (No. 2) and Walmart (No. 3) to claim first place as Forbes recently reported . With a value pegged at $781 billion and an average daily trading volume of nearly $20 billion, it’s not hard to see why Wall Street has been so impressed with Aramco these days; but what will happen if Saudi Arabia goes through with its plan to take it public? That could have some serious implications for business on a global scale—but more importantly, what does that mean for Saudi Arabia?


Why is it such a big deal?

Not only is Aramco now worth more than any company in history – including Exxon Mobil at its peak and Microsoft during the dot-com boom – but it is also poised to dethrone Apple as America’s most valuable company. With a market cap of $1.05 trillion, it's now technically bigger than Big Blue (though a wide gap remains in terms of actual numbers). The world’s largest oil producer has been minting money hand over fist: Reuters reported earlier in 2017 that Saudi Arabia expects to sell a 5 percent stake (or less) in Aramco next year for $100 billion-$200 billion.


How did they get so rich?

Crude oil is an extremely valuable resource, and Aramco has a lot of it. It’s estimated that Saudi Arabia has more oil than any other country in the world. The government-owned company also owns approximately 100% of all reserves located within Saudi Arabia, so even though OPEC recently made cuts to its production targets in order to raise global prices (which are currently at record lows), companies like Aramco will continue to prosper as demand for their product increases across international markets. In fact, according to President and CEO Khalid A. Al-Falih, Aramco plans on increasing its overall crude oil production by more than 1 million barrels per day between now and 2040.


If they keep growing at this rate they will...

Aramco (officially Saudi Arabian Oil Co) is a Saudi Arabian national petroleum and natural gas company based in Dhahran. If Aramco keeps growing at its current rate of 9 percent per year it will be producing more than 20 million barrels per day by 2030. At $60 per barrel and daily output that large, Aramco would be worth over $14 trillion (or about 19 percent of global GDP). To put that in perspective: if they were to go public today they would need to raise approximately $2 trillion in order to maintain their current growth rate.

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