Saudi Aramco achieved the $2 trillion valuations sought by Saudi leader Crown Prince Mohammed bin Salman on Thursday as the newly-listed state-owned oil company's shares rose sharply on their second day of trading.
The Saudi Crown Prince has made the Aramco initial public listing (IPO) the centrepiece of his plan to diversify the Kingdom's economy away from its dependence on oil production by using the $25.6 billion raised to develop other sectors.
But that was well below the Crown Prince's plan announced in 2016 which called for raising as much as $100 billion via international and domestic listings of a 5% stake in Aramco.
Bernstein analysts initiated Aramco with an "underperform" rating, estimating its value at around $1.36 trillion. This compares with US energy giant Exxon Mobil's valuation of less than $300 billion.
"Saudi Aramco is the largest, most profitable oil company in the world - but the size is not everything," they wrote, flagging the risk of slow net income growth if oil prices stay flat.
Bernstein's note said Saudi Arabian Oil Co (Aramco) should trade at a discount rather than the premium to international oil majors, with corporate governance "the key risk for investors" as Saudi Arabia will own more than 98% of the company.
"A valuation discount to western oil majors seems warranted," Bernstein said of Aramco, whose shares gained the maximum 10% allowed by the Riyadh exchange on their Wednesday debut. They hit 38.7 riyals ($10.32) on Thursday, before easing to 37.5 riyals, putting its market value at $2 trillion.
Aramco has become the world's biggest IPO, topping the $25 billion 2014 listing of China's Alibaba, despite limited interest from foreign investors leading it to cancel roadshows in New York and London.
It opted instead to sell just a 1.5% stake in Riyadh and rely mainly on domestic and regional buyers.
Some analysts said there could be a lag before the Aramco price settles and some investors take profits from the IPO.
"After Aramco hits $2 trillion, investors will debate: why should it go higher ... while its owners value it at $2 trillion?" a Gulf analyst who asked not to be identified said.
The analyst added that when National Commercial Bank (NCB) was listed in 2014 its shares rose by the maximum limit for 10 days before investors started selling.