Warren Buffett Would Never Buy the SpaceX IPO. Here's What He'd Do Instead.

SpaceX is expected to debut at a $1.77 trillion valuation, or $135 per share, but the article argues the price is too rich relative to fundamentals. The company reported $18.7 billion in 2025 revenue, but net income swung from a $791 million profit in 2024 to a $4.9 billion loss, while Morningstar values it at $780 billion. The piece recommends waiting for a lower entry point or gaining exposure indirectly through profitable investors such as Alphabet and Bank of America.

Analysis

The setup looks less like a clean IPO and more like a valuation transfer from private-market momentum to public-market scrutiny. At this size, the first-order risk is not business failure but multiple compression: a premium asset priced as a utility-like monopoly leaves little room for execution misses, and any post-listing lockup/float dynamics can create a sharp air pocket once marginal buyers disappear. The more important second-order effect is that public investors will start marking every adjacent space name against this anchor valuation, which could temporarily distort sentiment across launch, satellite, and defense-tech equities.

The clearest relative loser is the pure-play public comp set, especially RKLB, because the market will likely use SpaceX as both a ceiling and an excuse to rotate into “cheaper” space exposure. That said, the operating moat is not launch share alone; it is integrated cadence, reusability, and customer trust, so the biggest medium-term catalyst is not revenue growth but proof that capital intensity can decline faster than consensus expects. If margins continue to deteriorate while growth slows even modestly, the narrative can re-rate quickly over 3-6 months, not years.

The contrarian take is that the article’s recommended alternatives may be the better way to express the trade, but the most attractive angle is actually on the beneficiaries of index/ownership spillover. GOOGL and BAC already have embedded optionality with far less headline risk, and any retail enthusiasm for SpaceX may indirectly support large-cap tech and financials as ‘safer’ proxies for the same exposure. The biggest upside surprise would be if the public market rewards the scarcity value and the stock trades even richer initially; in that case, shorting too early is dangerous because momentum can overpower fundamentals for weeks.

Key Decisions for Investors

• Avoid buying the IPO at debut; wait 4-8 weeks for float expansion and analyst coverage to normalize price discovery before considering entry.
• Relative-value long GOOGL / short RKLB for 1-3 months: own the indirect beneficiary with actual cash generation while fading the most likely valuation-compression victim.
• Buy BAC as a low-volatility ‘space exposure proxy’ over the next 1-2 quarters; if retail interest persists, banks and large-cap holders can benefit from sentiment spillover without operating risk.
• If listed options are liquid, buy put spreads on RKLB 2-4 months out as a hedge against comps-driven multiple compression after the IPO hype peaks; target a 2:1 to 3:1 payoff if the stock de-rates 15-25%.
• Set a trigger to reassess bearishness only if post-listing gross margin/FCF inflects positively for a full quarter; otherwise treat any bounce as momentum-driven rather than fundamental.