, Columnist
Saudi Aramco's $2 Trillion Valuation Is an Illusion
Too few shares trade for typical price discovery metrics to apply to the oil giant.
Steel pipes from an oil refinery.
Photographer: imaginima/E+ via Getty Images
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Oil giant Saudi Aramco shares a couple of traits with Apple Inc. and Microsoft Corp.: a market capitalization measured in the trillions of dollars, and a stratospheric price-to-earnings ratio. Unlike those tech behemoths, though, Aramco’s valuation relies more on smoke and mirrors than the market’s collective wisdom.
That matters because the Saudi government, which directly and indirectly still controls 98% of the company’s equity after its 2019 initial public offering, is now mulling whether to sell more shares.