$1 Billion Losses Put Warren Buffett And Jeff Bezos In Bad Company

Just when you thought $1 billion losses were bygones of Covid-19 lockdown days, they’re back. But most surprisingly, S&P 500 companies mostly owned by Warren Buffett and Jeff Bezos were two of the companies to post them.

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Fifteen companies in the S&P 1500 and S&P Completion index including Buffett’s Berkshire Hathaway (BRKA) and Bezos’ Amazon.com (AMZN), posted massive second-quarter net losses of $1 billion — or much more. Such giant losses are a reminder that the economy’s issues are still straining some of the best-run companies.

The biggest loss of them all? Berkshire Hathaway, the industrial conglomerate that’s 15.6% owned by Buffett, posted a nearly $44 billion loss in the second quarter of 2022. It was one of the largest losses in U.S. history, and close to the $49 billion it lost in the first quarter of 2020.

Amazingly, that means Berkshire posted a loss many times greater than that at Uber Technologies (UBER) and Carnival (CCL), two businesses still reeling from the shutdowns. And it also lost more money than companies suffering from the cryptocurrency implosions like MicroStrategy (MSTR) and Coinbase (COIN).

Big Losses Are The Exception For S&P 500

When companies lose a billion dollars or more now, they stand out as losses this large are increasingly rare as the economy thaws.

During the second quarter, S&P 500 companies posted a median profit gain of 6.7%, says John Butters, earnings analyst at FactSet. That’s pretty anemic growth. It’s the smallest quarterly rise in profit since S&P 500 earnings inched up just 4% in the fourth quarter of 2020, during the Covid contraction.

But posting slow profit growth is a whole lot different than losing more than a billion dollars, like a surprising number of companies have.

The Billion-Dollar Losses In The Quarter

Berkshire Hathaway’s giant loss wasn’t as onerous as it might appear. Much of it is due to the intricacies of accounting. Still, it’s a commentary on the pressure even large investors are under this year.

Much of Berkshire’s loss is due to the enormous paper wealth lost from the drop in its holdings of Apple (AAPL). Buffett’s company holds a massive 900 million shares of the smartphone maker. So, when the share price of Apple fell nearly 22% in the second quarter, that amounted to a roughly $34 billion paper loss for Berkshire Hathaway.

Is it a giant loss? Yes, but since Berkshire Hathaway didn’t sell and realize the loss, investors are willing to look past it for now. Shares of Berkshire Hathaway are up 1% this year. Not bad in a year the S&P 500 is off more than 10%.

What about Amazon.com, which Bezos owns 10% of? Investors were braced for a bad second quarter all year. Shares of the online retailer are down more than 14% this year. And the company delivered on the fears with a giant $2 billion loss for the quarter as it overexpanded during the pandemic. But investors think the pain is behind it, and are calling for Amazon to make more than $2 billion in the September-ended quarter.

Companies Still Struggling Post Pandemic

It might be surprising to see Berkshire Hathaway and Amazon.com at this point in its development putting up huge losses. But they’ve become the norm for some companies still reeling in the post-Covid world.

Teladoc Health (TDOC), a pioneer in online health care, suffered a giant $3.1 billion net loss in the second quarter, as it reported on July 27. And Carnival the cruise ship operator, in mid-June posted a quarterly loss in the May-ended quarter of $1.8 billion. Carnival’s CEO of nearly a decade, Arnold Donald, said in early August he stepped down as top executive. The company is seen losing money in the next four-straight quarters.

Such massive losses are a reminder that this economy — and market — still isn’t in the clear.

Biggest Corporate Losses

All lost $1 billion or more in the second quarter of 2022

 Sources: IBD, S&P Global Market Intelligence

Follow Matt Krantz on Twitter @mattkrantz

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