BYD's Market Reaction to Warren Buffett's Alleged Stake Sale: Short-Term Sentiment vs. Long-Term Fundamentals

The recent full exit of Warren Buffett's Berkshire Hathaway from its 17-year stake in BYD, a Chinese electric vehicle (EV) manufacturer, has sparked intense debate about the interplay between short-term investor sentiment and long-term business fundamentals. While the sale triggered immediate market turbulence, BYD's underlying financial and operational strength suggests a more nuanced narrative. This analysis examines the real impact of Buffett's divestment, contrasting fleeting market reactions with the company's enduring growth trajectory.

Short-Term Sentiment: Volatility and Uncertainty

Berkshire's gradual reduction of its BYD stake began in August 2022, culminating in a complete liquidation by March 2025Buffett Munger BYD exits stake^[1]. The initial sales, which reduced ownership from 20.04% to 19.92% in August 2022, triggered a sharp 36% drop in BYD's share priceBuffett's Berkshire has liquidated its remaining stake in BYD^[2]. This reaction reflected investor anxiety over potential shifts in Berkshire's strategic priorities and geopolitical risks, such as trade tensions affecting Chinese EV exportsAs BYD shares soar, Warren Buffett has paused selling …^[3]. Even as BYD's stock rebounded nearly 9% in 2024, a September 2025 selloff wiped out $45 billion in market value, driven by concerns over aggressive pricing strategies and domestic competitionBYD’s $45 Billion Stock Wipeout Raises Doubts on China Outlook^[4].

Such volatility underscores the power of sentiment in capital markets. As noted by Bloomberg, the stock's 30% decline from its 2025 peak highlighted fears that BYD's price-war tactics might erode profitabilityBYD’s $45 Billion Stock Wipeout Raises Doubts on China Outlook^[4]. However, these reactions often overstate risks, as short-term noise can obscure long-term value.

Long-Term Fundamentals: Resilience and Growth

Despite the market jitters, BYD's financial and operational metrics tell a story of robust growth. From 2020 to 2024, its revenue surged from 156.6 billion yuan to 777.1 billion yuan, with net profit rising 34% year-on-year to 40.25 billion yuanBYD reports its financial results in 2024^[5]. The company's new energy vehicle (NEV) business, which contributed over 533 billion yuan in sales revenue in 2023, now commands nearly 25% of the global NEV marketBYD Auto - statistics & facts^[6].

International expansion further solidifies BYD's long-term potential. In July 2025, European EV registrations soared 225% year-on-year, positioning the company to double its overseas sales in 2025 compared to 2024BYD on track for global success^[7]. Even as domestic challenges persist—such as a revised 2025 delivery target of 4.6 million units—BYD's cash reserves (154.9 billion yuan) and R&D investments (54.2 billion yuan in 2024) demonstrate its capacity to navigate competitive pressuresBYD scores YoY jump in 2024 annual revenue, net profit^[8].

Contrasting Sentiment and Fundamentals

The divergence between market sentiment and fundamentals raises critical questions for investors. While Buffett's exit may signal a strategic reallocation of capital, it does not inherently reflect a lack of confidence in BYD's business model. As a Berkshire spokesperson noted, the decision was driven by a desire to “allocate capital to other opportunities amid global uncertainties”Buffett Munger BYD exits stake^[1], not by doubts about BYD's operational excellence.

Moreover, BYD's performance post-sale defies conventional wisdom. Despite the 2025 stock selloff, the company's revenue and profit growth outpaced industry averages, and its international expansion is on track to capture significant market share. This suggests that short-term volatility may present buying opportunities for investors focused on long-term value.

Conclusion

Warren Buffett's divestment from BYD has undoubtedly influenced short-term market dynamics, but it should not overshadow the company's compelling long-term fundamentals. While investor sentiment remains sensitive to geopolitical risks and pricing strategies, BYD's financial resilience, innovation, and global expansion position it as a leader in the EV transition. For investors, the challenge lies in distinguishing transient noise from enduring value—a task that demands a disciplined focus on both market signals and business substance.