Berkshire Hathaway $1 million a share
It is quite likely that Berkshire Hathaway shares hit $1 million a share by 2030.
Let me explain why.
Berkshire has recently been buying back its shares at approximately 5% per annum.
If this continues, there would be approximately 37% less shares outstanding by 2030.
If Berkshire grows its earnings by 7% over this period, then that would be 83% higher earnings by 2030.
83% higher earnings with a 37% lower share count is 2.9 times the current earnings per share.
The current share price is $350,701. $350,701 times 2.9 is $1,017,032.
There are two assumptions here that I think are somewhat rational:
- Earnings grow at 7% per annum and;
- Share count reduces at 5% per annum.
Earnings Growth
Expecting earnings growth of 7% a year is certainly not a stretch of the imagination for a company that has grown revenue at 11.27% over the last decade.
Share Count Reduction
Whilst Buffett has been buying back of late, his reluctance to do so over the last few years is notable. He may prefer a large “elephant gun” purchase over buybacks, however this has not materialised.
