Berkshire Hathaway (BRK.B) (BRK.A), the storied conglomerate synonymous with investment legend Warren Buffett, has seen its stock price tumble more than 10% since Buffett announced his retirement as CEO at the company’s annual shareholder meeting in early May 2025. The decline marks a significant shift for the company, which has long enjoyed a “Buffett premium” — a valuation boost attributed to investor confidence in Buffett’s stewardship.
On May 3, 2025, Warren Buffett, age 94, stunned shareholders by revealing he would step down as CEO at the end of the year, ending a 60-year tenure that transformed Berkshire Hathaway from a struggling textile firm into a trillion-dollar conglomerate. Greg Abel, Berkshire’s vice chairman, was named as his successor, a move that had been anticipated but still sent shockwaves through the investment community.
The immediate aftermath saw Berkshire’s Class A shares fall from a record $809,350 to $769,960, while Class B shares dropped from $539.80 to $512.94 — a roughly 5% dip in both classes in the days following the news. However, the selloff continued over the subsequent weeks, with both classes of shares now down more than 10% from their pre-announcement highs.
Analysts attribute the decline in part to the evaporation of the so-called “Buffett premium.” For decades, investors were willing to pay extra for Berkshire stock, betting on Buffett’s legendary investment acumen and steady hand. With his retirement, some of that confidence has eroded, and the company’s shares are now trading more in line with their intrinsic value, rather than the mystique of Buffett’s leadership.
The timing of Buffett’s retirement announcement coincided with a period of underperformance for Berkshire. While the S&P 500 Index ($SPX) has risen about 5% since March, Berkshire’s Class B shares have fallen from a 52-week high of $542.07 to around $484, a decline of over 10% during the period.
The leadership transition is not the only factor weighing on Berkshire’s stock. The company reported a 14% year-on-year drop in operating profit to $9.64 billion in the first quarter of 2025, and net profit plunged 64% to $4.6 billion. Losses related to California wildfires and weaker performance in some of its key businesses have further dampened investor sentiment.
