What Company Has the Most Expensive Stock?

Many wonder which company has the ‘most expensive stock.’ The answer involves understanding various factors that influence a stock’s price, including its nominal price per share, the number of shares available, and the company’s overall value. This article explores what makes a stock’s price high and its implications for investors.

Identifying the Company with the Highest Stock Price

Berkshire Hathaway Inc. Class A (BRK.A) consistently stands out for its high nominal stock price per share. A single share of Berkshire Hathaway Class A trades for approximately $734,405.00, making it the most expensive stock in the world on a per-share basis.

This high price is largely attributed to the company’s long-standing policy of not splitting its Class A shares. Unlike many companies that periodically divide their shares for accessibility, Berkshire Hathaway has historically preferred to attract long-term investors. The company introduced Class B shares (BRK.B) in 1996, which trade at a significantly lower price and offer a more affordable entry point for individual investors.

Factors Contributing to a High Stock Price

Several factors can lead to a company having a high stock price per share. One significant reason is a limited number of outstanding shares. If a company issues fewer shares, each existing share represents a larger portion of the company’s ownership, which can drive up its individual price.

Consistent strong earnings and sustained growth also contribute to a high stock price. When a company demonstrates a long history of profitability and increasing revenue, investor demand for its shares tends to rise. This increased demand, coupled with a fixed or limited supply of shares, pushes the price per share upward.

A company’s decision not to execute stock splits is another primary driver of a high nominal share price. A stock split involves dividing existing shares into multiple new shares, which reduces the price per share while increasing the total number of shares outstanding. Companies that avoid splits allow their share price to climb over decades as the company’s value grows.

Stock Price Versus Company Valuation

It is important to understand the distinction between a high nominal stock price per share and a company’s overall valuation. A high stock price for a single share does not necessarily mean the company is the most valuable in the market. The true measure of a company’s total value is its market capitalization.

Market capitalization, often referred to as market cap, is calculated by multiplying the current market price of one share by the total number of outstanding shares. For example, a company with 1 million shares trading at $100 per share would have a market capitalization of $100 million. Conversely, a company with 100 million shares trading at $10 per share would have a market capitalization of $1 billion, making it a much more valuable company despite its lower per-share price.

While Berkshire Hathaway has the highest nominal share price, companies like Apple, Microsoft, and NVIDIA often have significantly higher market capitalizations. These technology giants have trillions of dollars in market capitalization due to their vast number of outstanding shares. Therefore, ‘expensive stock’ in terms of nominal price does not equate to being the ‘most valuable company’ overall.

Implications of High Stock Prices for Investors

A high nominal stock price can create a perceived barrier to entry for individual investors. Purchasing a single share of a stock trading in the hundreds of thousands of dollars might seem unattainable for many. This high cost per share can limit direct ownership for those with smaller investment budgets.

However, fractional share investing has mitigated this barrier. Many brokerage platforms allow investors to buy portions of a share rather than needing to purchase an entire one. This means an investor can allocate a specific dollar amount to buy a fraction of a high-priced stock, making it accessible even with limited funds.

Despite the high price, a stock’s per-share cost alone does not indicate whether it is a good investment or if it is overpriced. A thorough fundamental analysis, which involves evaluating a company’s financial health, management, industry, and future prospects, remains essential. Investors should consider the company’s earnings, growth potential, and overall market capitalization in relation to its price, rather than solely focusing on the nominal share price.