Berkshire Shares Fall as Warren Buffett Prepares to Step Down as CEO

The announcement of Warren Buffett’s retirement as CEO of Berkshire Hathaway has sent shockwaves through the market, with shares dropping sharply in the wake of the news. The legendary investor’s decision to step down by year-end 2025 marks the end of an era, but the company’s fundamentals and successor’s track record suggest this may be a buying opportunity for long-term investors.

The Immediate Market Reaction

Buffett’s surprise announcement at Berkshire’s annual shareholder meeting on May 3, 2025, triggered an immediate 2.9% drop in Class B shares (BRK.B), with prices falling to $524 in premarket trading after hitting a record high of $539.80 just days earlier. Class A shares (BRK.A) also fell 2.8%, closing at $809,350—a historic high—before the decline. The sell-off reflected investor uncertainty about whether Greg Abel, the designated successor, can replicate Buffett’s track record.

Technical Analysis: Key Levels to Watch

The drop breached critical support levels, with analysts highlighting two key thresholds:
- $519: A short-term support level tied to an early March 2025 peak.
- $490: A long-term support level linked to the 50-day moving average.

A sustained close below $519 could signal further declines toward $490, but technical patterns suggest resilience. Prior to the selloff, Berkshire had broken out of an ascending triangle pattern, with bullish targets of $585–$606 if support holds. The relative strength index (RSI) remained neutral, indicating room for recovery.

The Fundamentals: Why Buffett’s Legacy Still Matters

Despite the short-term volatility, Berkshire’s $347.7 billion cash reserves and diversified portfolio provide a robust foundation. The conglomerate’s holdings span insurance (Geico), railroads (BNSF), energy, and consumer brands (Dairy Queen), with major equity stakes in Apple ($70 billion), American Express, and Chevron.

Investor Sentiment and the Road Ahead

The sell-off largely reflects the erosion of the so-called “Buffett premium”—a valuation boost tied to his legendary reputation. However, Buffett’s decision to remain chairman until his death ensures continuity, while Abel’s proven leadership in non-insurance operations offers reassurance.

• Greg Abel’s Track Record: As CEO of Berkshire Hathaway Energy, Abel has overseen operational efficiency gains and infrastructure investments, positioning him as a capable successor.
• Cash to Catalyst: Berkshire’s vast cash reserves mean Abel has the firepower to deploy capital into undervalued assets—a strategy that fueled Buffett’s success.

The Bigger Picture: Long-Term Outperformance

Since Buffett took over in 1965, Berkshire’s shares have delivered a 5,502,284% return, compared to 39,054% for the S&P 500. This equates to a 19.9% annualized return, nearly double the broader market’s 10.4%. While short-term volatility is inevitable, Berkshire’s $1.2 trillion market cap and Abel’s readiness suggest the company remains a long-term growth story.

Conclusion: A Transition, Not an End

The immediate drop in Berkshire’s shares is a natural reaction to the loss of its iconic leader. Yet the fundamentals—cash reserves, diversified businesses, and Abel’s leadership—argue that this is a correction, not a collapse.

Investors should focus on the data:
- YTD Performance: Berkshire’s Class B shares were +17.3% year-to-date through May 2025, outperforming the S&P 500’s -6.4% decline.
- Cash and Resilience: The $347 billion cash buffer and stable insurance operations provide a cushion against macroeconomic headwinds.
- Abel’s Momentum: His track record and the board’s unanimous support suggest a smooth transition.

While the “Buffett era” premium may fade, Berkshire’s operational strength and disciplined capital allocation remain intact. For long-term investors, the post-announcement dip could mark a rare entry point into one of history’s most successful investment vehicles. As Buffett himself might say: “Be fearful when others are greedy, and greedy when others are fearful.”

Data as of Q1 2025. Past performance does not guarantee future results.