Should You Buy SpaceX After Its IPO? Here Are 3 Lessons to Heed from Warren Buffett
Written by Keith Speights for The Motley Fool -> IPOs are usually structured to benefit the seller. Understand the business -- including the risks. SpaceX (NASDAQ: SPCX) has launched. And it was a doozy. The space technology pioneer went public on Friday and instantly became t
SpaceX (NASDAQ: SPCX) has launched. And it was a doozy. The space technology pioneer went public on Friday and instantly became the seventh-largest company traded on a U.S. stock exchange .
Should investors jump on the SpaceX bandwagon after its record-setting IPO? Here are three lessons to heed from Warren Buffett.
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Buffett stated at Berkshire Hathaway 's (NYSE: BRKA) (NYSE: BRKB) annual shareholder meeting in 2004 that IPOs "come when the seller thinks that the market is ready for them. And they come with an informed seller thinking it's a pretty good time to go public." The legendary investor also said that sellers "don't pick a time necessarily that's good for you" as a retail investor.
His mentor, Benjamin Graham , summed things up with even stronger words. The Intelligent Investor author quipped, "Weighing the evidence objectively, the intelligent investor should conclude that IPO does not stand only for 'initial public offering.' More accurately, it is also shorthand for: It's Probably Overpriced, Imaginary Profits Only, Insiders' Private Opportunity, or Idiotic, Preposterous, and Outrageous."
Whether or not you fully agree with Graham's take, his reference to "insiders' private opportunity" aligns with Buffett's view. IPOs are almost always structured to maximize benefits for the sellers. It's not just about the price, either. For example, Elon Musk still holds roughly 82.4% of SpaceX's voting power. Other shareholders have virtually no say in what the company does.
One of Buffett's most famous quotes is: "Price is what you pay. Value is what you get." Before buying SpaceX stock, investors should first determine if they're getting their money's worth. Many analysts would argue that they won't at the current price.
SpaceX generated revenue of $18.7 billion in 2025. Its market cap at the end of its IPO day was $2.1 trillion. That translates to a price-to-sales ratio of over 112. To say that the stock is priced for perfection is an understatement.
