Finance

Buffett’s Berkshire Hathaway hits $1 trillion market value, first U.S. company outside of tech to do so

Published

8 months ago

August 28, 2024

Business Finance News

Warren Buffett tours the grounds at the Berkshire Hathaway Annual Shareholders Meeting in Omaha Nebraska.

David A. Grogan | CNBC

Warren Buffett’s Berkshire Hathaway reached a $1 trillion market capitalization on Wednesday, the first non-technology company in the U.S. to score the coveted milestone.

Shares of the Omaha-based conglomerate have rallied more than 28% in 2024, far above the S&P 500’s 18% gain. The $1 trillion threshold was crossed just two days before the ‘Oracle of Omaha’ turns 94 years old.

The shares were up 1.2% to hit a high of $699,440.93 on Wednesday, allowing it to top the $1 trillion mark, per FactSet.

Unlike the six other companies in the trillion dollar club (Apple, Nvidia, Microsoft, Alphabet, Amazon, Meta), Berkshire is known for its old-economy focus as the owner of BNSF Railway, Geico Insurance and Dairy Queen. (Although its sizable Apple position has helped drive recent gains.)

Buffett took control of Berkshire, a struggling textile business, in the 1960s and transformed the company into a sprawling empire that encompasses insurance, railroad, retail and energy with an unmatched balance sheet and cash fortress.

Buffett has been in a defensive mode as of late, dumping a massive amount of stock, including half of his Apple stake, while raising Berkshire’s cash pile to a record $277 billion at the end of June.

While Buffett famously never times the market and advises others to not try to either, these recent moves served as a wake-up call to some of his followers on Wall Street, who believe he saw some things he did not like about the economy and market valuation.

Berkshire invests the majority of its cash in short-term Treasury bills, and its holding in such securities — valued at $234.6 billion at the end of the second quarter — has exceeded the amount the U.S. Federal Reserve owns.

So it’s hard to judge why investors are rewarding Berkshire with the $1 trillion crown today, whether it’s a bet on the American economy and Buffett’s sprawling set of businesses set to benefit if it keeps chugging along or whether they see Berkshire as a cash fortress that will generate steady income in the face of an uncertain macro environment.

The conglomerate also started a selling spree of Bank of America shares in mid-July, dumping more than $5 billion worth of the bank stock. Buffett bought BofA’s preferred stock and warrants in 2011 in the aftermath of the financial crisis, shoring up confidence in the embattled lender struggling with losses tied to subprime mortgages.

High price tag

Berkshire’s original Class A shares carry one of the highest price tags on Wall Street. Today, each one sells for 68% more than the median price of a home in the U.S.

Berkshire Hathaway A shares, long term

That’s because Buffett has never split the stock, arguing that the high share price attracts and retains more long-term, quality-oriented investors. The Ben Graham protégé has said that many Berkshire shareholders use their stock as a savings account.

Still, Berkshire issued Class B shares in 1996 at a price equal to one thirtieth of a Class A share to cater to smaller investors wanting a small piece of the Buffett’s performance.

Finance

More Americans buy groceries with buy now, pay later loans

Published

4 hours ago

April 26, 2025

Business Finance News

People shop for produce at a Walmart in Rosemead, California, on April 11, 2025.

Frederic J. Brown | Afp | Getty Images

A growing number of Americans are using buy now, pay later loans to buy groceries, and more people are paying those bills late, according to new Lending Tree data released Friday.

The figures are the latest indicator that some consumers are cracking under the pressure of an uncertain economy and are having trouble affording essentials such as groceries as they contend with persistent inflation, high interest rates and concerns around tariffs.

In a survey conducted April 2-3 of 2,000 U.S. consumers ages 18 to 79, around half reported having used buy now, pay later services. Of those consumers, 25% of respondents said they were using BNPL loans to buy groceries, up from 14% in 2024 and 21% in 2023, the firm said.

Meanwhile, 41% of respondents said they made a late payment on a BNPL loan in the past year, up from 34% in the year prior, the survey found.

Lending Tree’s chief consumer finance analyst, Matt Schulz, said that of those respondents who said they paid a BNPL bill late, most said it was by no more than a week or so.

“A lot of people are struggling and looking for ways to extend their budget,” Schulz said. “Inflation is still a problem. Interest rates are still really high. There’s a lot of uncertainty around tariffs and other economic issues, and it’s all going to add up to a lot of people looking for ways to extend their budget however they can.”

“For an awful lot of people, that’s going to mean leaning on buy now, pay later loans, for better or for worse,” he said.

He stopped short of calling the results a recession indicator but said conditions are expected to decline further before they get better.

“I do think it’s going to get worse, at least in the short term,” said Schulz. “I don’t know that there’s a whole lot of reason to expect these numbers to get better in the near term.”

The loans, which allow consumers to split up purchases into several smaller payments, are a popular alternative to credit cards because they often don’t charge interest. But consumers can see high fees if they pay late, and they can run into problems if they stack up multiple loans. In Lending Tree’s survey, 60% of BNPL users said they’ve had multiple loans at once, with nearly a fourth saying they have held three or more at once.

“It’s just really important for people to be cautious when they use these things, because even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it,” said Schulz. “So people should tread lightly.”

Lending Tree’s findings come after Billboard revealed that about 60% of general admission Coachella attendees funded their concert tickets with buy now, pay later loans, sparking a debate on the state of the economy and how consumers are using debt to keep up their lifestyles. A recent announcement from DoorDash that it would begin accepting BNPL financing from Klarna for food deliveries led to widespread mockery and jokes that Americans were struggling so much that they were now being forced to finance cheeseburgers and burritos.

Over the last few years, consumers have held up relatively well, even in the face of persistent inflation and high interest rates, because the job market was strong and wage growth had kept up with inflation — at least for some workers.

Earlier this year, however, large companies including Walmart and Delta Airlines began warning that the dynamic had begun to shift and they were seeing cracks in demand, which was leading to worse-than-expected sales forecasts.