The World’s First $1 Trillion Company Won’t Be Apple

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For Apple Inc. (NASDAQ: AAPL) to reach a market cap of $1 trillion, the company’s share price needs to rise by another six bucks or so (3%) from its new high set Wednesday. Barring a black swan event of epic proportions, Apple will hit the magic number any day now.

But the Cupertino behemoth won’t be the first publicly traded company to reach that valuation. More than 10 years ago, China’s state-controlled oil giant PetroChina Co. Ltd. (NYSE: PTR) posted a market cap of $1.005 trillion on the day of its initial public offering in Shanghai. The class A shares went out at 16.7 yuan, and the stock nearly tripled on its first day of trading to 43.96 yuan. At the time it took about 7.5 yuan to equal one U.S. dollar.

PetroChina had traded in Hong Kong and New York since a dual listing in 1999, but the Shanghai listing for 4 billion class A shares was by far the company’s largest public sale of stock. Even then, the class A shares amounted to only about 2.5% of PetroChina’s shares outstanding. The government owns about 86% of PetroChina.

Two factors conspired to boost the company’s market cap to $1 trillion. First, Brent crude oil prices had risen to more than $90 a barrel by November 5, 2007, the date of the Shanghai listing. Brent topped out at about $144 a barrel in July 2008.

The second factor was the Chinese government, which pushed hard for more commodity-related development. Chinese citizens were barred from investing in overseas equities markets, and interest on savings accounts was not keeping up with the country’s inflation. Investing in Chinese equities looked like a sure winner.

By the end of 2007, though, Brent prices had dropped back the low $30-per-barrel range. The bigger problem for PetroChina and its state-controlled brethren Sinopec and Cnooc was the aggressive government-directed policy of acquiring as much oil and gas resource as possible. That meant going into debt in a big way. Because the government also controlled what the companies could charge for the oil they produced and the fuel they refined, these giant oil firms were relegated to a role as tools of public policy. Carried to an extreme, what you get is Venezuela today.

By 2017 PetroChina had lost about $800 billion in market cap since its Shanghai listing. Its American depositary receipts closed Wednesday at $74.16 in New York, and its forward price-to-earnings ratio is north of 30, compared with Apple’s ratio of 17.48.

Apple posted a new 52-week high of $201.76 on Wednesday and closed the regular trading session at $201.50. The 52-week low is $148.41, and the consensus price target is $214.29, well above the number needed to reach a market cap of $1 trillion.