More 200-pound Great Dane than puppy... If oil is king, then Saudi Aramco is the king of oil — and the most valuable company to IPO, ever. It went public Wednesday on Saudi Arabia's stock exchange (not the NYSE or Nasdaq) and shares jumped 10% on Day #1 of trading. Let's peep the key numbers:
- $1.9T: That's Trillion with a "T." It's Saudi Aramco's record-breaking valuation after that surge in its stock price (Apple, the most valuable US company, enjoys a $1.2T valuation).
- 1.5%: The tiny-ish percentage of Aramco shares that were actually publicly listed — the Saudi government is keeping the other 98.5% (at least for now).
- $111B: Aramco's profit last year, making it the most profitable company in the world, by far.
Keeping it gassy (at a low-cost)... Saudi Aramco squeezes so much profit out of every oil barrel because the cost of producing each one is relatively small. It's not just the oil reserve real estate Saudi Arabia sits on — it also extracts the fossil fuel at a super low cost.
- As of 2016, the UK has to drop $44 to produce a single barrel of oil.
- The US shells out $23 per barrel.
- Saudi Arabia spends less than $9. That's less than a Sweetgreen salad. And today oil is selling for $58 per barrel (that's some thick profit margin).
Aramco is a unique combo of risks and rewards... Saudi oil is close to home — they don't have to dig deep into the earth as the US does, or go to ocean depths like the UK. But this natural competitive advantage doesn't mean there's no risk... The world's pivot to sustainable energy could speed up, depriving Aramco of oil sales sooner than expected. Or political instability could mess with its largest shareholder: The Saudi government. Bigger isn't perfect.