Buffett’s Berkshire Takes a Hit: ’Oracle Premium’ Evaporates as Shares Plunge

Wall Street's favorite insurance conglomerate is bleeding value—and no amount of homespun wisdom can stop the slide.

The 'Buffett premium'—that mystical markup investors happily paid for decades—is officially MIA. Berkshire Hathaway shares are in freefall as the market finally asks: What's so special about a boomer-era holding company in a digital asset world?

Active verbs only? Try these: Shares crater. Investors flee. Legacy finance clings to fading relevance.

Here's the cynical kicker: Maybe the real 'intrinsic value' was the friends we made while overpaying for Class A shares all along.

Buffett premium ‘disappears,’ earnings drop

According to stock market analysts, the Berkshire Hathaway share sell-off is partly attributed to the “evaporation” of the Buffett premium. 

David Kass, a finance professor at the University of Maryland and longtime Berkshire shareholder, is surprised the stocks are underperforming while Buffett is still leading the company for the remainder of the year. 

“This relative decline may approach as much as 20% in the weeks ahead as some shareholders may become discouraged by Berkshire’s recent price performance,” Kass predicted.

Kevin Heal, an equity analyst at Argus Research who covers Berkshire Hathaway, noted that initial losses in the stock were likely triggered by algorithmic trading reactions to the leadership transition news. Subsequent declines, he said, appeared more fundamentally driven, tied to the company’s businesses and recent earnings performance.

In the first quarter of 2025, Berkshire’s operating earnings, which include its wholly owned insurance, energy, and railroad subsidiaries, dropped 14% to $9.64 billion. 

Valuation range falls as confidence wanes

At its peak in early May, Berkshire Hathaway was trading at approximately 1.8 times its March 31 book value. That ratio has since fallen to around 1.6 times, bringing it closer to its average historical range of about 1.5. 

Some investors see this as a sign that the sell-off may be approaching a natural bottom, though others are waiting for the market to digest both structural and emotional adjustments to a post-Buffett Berkshire.

The conglomerate’s current market capitalization is still above $1 trillion. However, analysts are closely watching how the company will adapt under new leadership and if Abel can preserve, or even improve, the shareholder value created during Buffett’s 60-year tenure.

Buffett told the Wall Street Journal on May 14 that he plans to continue working from Berkshire’s Omaha headquarters after stepping down as CEO. “I’m not going to sit at home and watch soap operas,” he said. “My interests are still the same.”

Succession planning spotlight on Abel

Greg Abel is a trusted lieutenant who has helped Buffett manage Berkshire’s network of non-insurance businesses. Abel joined Berkshire Hathaway in 1999 after it acquired a controlling stake in MidAmerican, where he was serving as president. 

He became CEO of MidAmerican in 2008, before it was renamed Berkshire Hathaway Energy.

Shareholders expect Abel to keep the company’s culture of long-term value investing and decentralized management. 

Beyond the investment anthem, they could push the new CEO to open doors to emerging technologies, which could subtly change Berkshire’s investment philosophy. Buffett insists that Berkshire’s succession plans are meant to keep the firm stable beyond his retirement. 

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