Warren Buffett's Berkshire Hathaway Inc share price has risen to over $4,21,000 per Class A share. But, the stock’s impressive 41-year run may soon come to a screeching halt, if the US stock exchange Nasdaq doesn’t upgrade its computer systems soon.
Warren Buffett’s Berkshire Hathaway Inc share price has risen to over $4,21,000 per Class A share. But, the stock’s impressive 41-year run may soon come to a screeching halt, if the US stock exchange Nasdaq doesn’t upgrade its computer systems soon, The Wall Street Journal reported. The reason being: Berkshire Hathaway’s share price is very close to the highest number that Nasdaq’s computers can handle. Nasdaq and a few other market operators use 32-bit systems to store data in binary numbers, which comprises ones and zeroes. Therefore, the biggest possible number is two to the 32nd power minus one, which is 4,294,967,295. Stock prices are usually displayed up to four decimal places, so the highest possible price is $429,496.7295, the WSJ report said.
On Tuesday, Nasdaq temporarily stopped displaying prices of Berkshire Hathaway Inc Class A shares over various data feeds. “Even other stock exchanges like IEX Group Inc., had said months earlier that it would stop taking orders in Class A shares due to an internal price limitation within the trading system,” according to a Wall Street Journal report. As Warren Buffett’s firm’s stock price is approaching close to this level, Nasdaq temporarily stopped displaying the prices. “No other stock is anywhere near Berkshire Class A’s stratospheric price levels, so it is understandable why the engineers behind Nasdaq’s and IEX’s systems chose the number format, which programmers call a four-byte unsigned integer,” the report added.
The second-highest stock price is of NVR Inc, with a price of around $5,100. The reason why Berkshire’s class A stock is trading at such a high price is that Berkshire Hathaway’s Class A shares have not gone through any stock splits in the history of the company. It kept surging along with the growth of the business, since listing on March 16, 1980. “I know that if we had something that it was a lot easier for anybody with $500 to buy, that we would get an awful lot of people buying it who didn’t have the faintest idea what they were doing,” Warren Buffett told investors at Berkshire’s annual meeting in 1995.
The report noted that in an alert to clients on Monday, Nasdaq said it would finish an upgrade of its data feeds on May 17, 2021, to allow stock prices greater than $429,496.7295. Until then, the exchange said it would temporarily suspend broadcasting the price of any stock that exceeds 98 per cent of the threshold. A Nasdaq spokeswoman confirmed to WSJ that the stock had effectively disappeared from the data feeds, including Nasdaq Last Sale and Nasdaq Basic. “Data integrity is of utmost importance at Nasdaq,” WSJ cited a spokeswoman for the New York-based exchange operator as saying. She called this move a temporary measure. “A spokesman for the New York Stock Exchange, where Berkshire is listed and which handles much of the trading in the company’s Class A shares, said the NYSE’s systems wouldn’t be affected by the issue,” the report added.