Why is Berkshire Hathaway stock so expensive?
The reasoning behind the $320,000+ per share stock price of Berkshire Hathaway can be attributed to a few factors. Warren Buffett has never split Berkshire stock. 38 years ago, in 2019 you could buy a Berkshire stock for less than $300 per share. In 2000, the stock price increased to $50,000 and today, $320,000+ per share.
Another reason behind the high stock price is increasing profits. The last quarter showed that profits increased by 67% to $4,190 per Class A share. This has caused Zacks to increase 2018 and 2019 earnings estimates.
A stock split is when a company increases the total number of shares outstanding, whilst lowering the price of each stock. This means that the market capitalization will remain the same, but the price of a single share will decrease. Shareholders who own one share for $500 will now own two shares for $250 each. The total value of the company does not change.
In short, Buffett has not split the Berkshire’s stock because he is scared that traders will see it as an opportunity to day trade the stock and make quick gains.
Read our guide: what is a stock split ?
Buffett has explained that he sees Berkshire shareholders as partners more than just investors. He wants them to stay invested in the company, which means that the company has a low risk factor.
For everyday traders wanting to trade Berkshire stock, it is so expensive that you will need to think about the long-term economy before investing. One share in Berkshire can buy you either a house, college tuition or twenty Toyota Corollas. The high price point of the stock ensures that traders do not buy in looking for quick gains, but rather a long-term partnership.
Berkshire stock has even bought back a small percentage of its stocks recently. With a stock price at a current sixth month high, the company may be near a buy point
The future of Berkshire is bright, as the cash pile increases from $116 billion to $120 billion, Buffett is looking to invest even further in Apple and buy back even more stocks.
5 Most Expensive Stock Market Companies
5. NVR Inc. – (NYSE: NVR)
NVR is the parent company of Ryan Homes. Founded in 1940, NVR focuses on building new homes and mortgages across the U.S. The company constructs homes under the Ryan Homes, Rymarc Homes, Heartland Homes and Fox Ridge Homes names. NVR has constructed over 365,000 homes across the U.S. In 2017 the company announced revenue reached $6.30 billion, with a net income of $537 million for the year. NYSE: NVR is the fifth most expensive stock on any stock exchange.
4. Seaboard Corporation – (NYSEAMERICAN: SEB)
Seaboard Corp is a Fortune 500 company boasting mega revenues of $5.81 billion in 2017. Seaboard’s main revenue stream comes from pork production and logical processing. With ocean transport being the other main source of Seaboard’s revenue. Seaboard’s global business includes grain processing, sugar production, electrical power generation and commodity merchandising. SEB owns 30 container vessels and employs around 23,000 people.
3. Next Plc – (LSE: NXT)
Next is a British retail company, located on most high streets across the U.K. Specializing on clothing, footwear and home products. Next (LSE: NXT) has 638 stores and is the largest clothing retailer in the UK, based on sales. Its closest competitor is Marks & Spencer. Next has three main businesses, with Next International (180 stores) and Next Directory, which is a home shopping catalogue with more than three million active customers.
Next’s own brands include Lipsy, which markets its own branded women’s clothing online and in-store.
Next Plc had revenues of $5.6 billion in 2-17 and profit of $1.09 billion before profit, in 2017.
2. Lindt & Sprungli AG – (SWX: LISN)
Lindt & Sprüngli AG, also known as Lindt, is a Swiss-founded chocolate company founded in 1845. Their premium confectionary is internationally known, with chocolate bars and truffles being their most popular products.
Lindt has six factories operating in Europe. Not to mention, it also has a factory in San Leandro, California. SWX: LISN is the second most expensive stock on any exchange at the time of publishing.
1. Berkshire Hathaway Inc. – (NYSE: BRK.A)
Berkshire Hathaway is leaps and bounds above any other company’s stock in terms of price point. Berkshire Hathaway is clearly the most expensive stock in the world, with its class A shares trading over $320,000 a share on the New York Stock Exchange.
The most expensive stock in the world belongs to investor and stock market guru, Warren Buffett. NYSE: BRK.A is a holding company with a huge portfolio, owning companies such as Dairy Queen, NetJets, Fruit of the Loom, GEICO, Helzberg Diamonds, Lubrizol and BNF. Holding blue chips like Apple, American Express, Wells Fargo and Coca Cola. Warren Buffet is arguably the most well-known stock market investor of all time with a net worth of over $85 billion. Buffett is also the third richest man in the world.