Elon Musk's SpaceX Initial Public Offering (IPO) is officially priced at $135 per share, setting the stage for the largest public offering in Wall Street history. According to Motley Fool analyst Cathie Hogan, legendary investor Warren Buffett would likely avoid buying the stock at its debut valuation and instead seek alternative ways to gain exposure to the company.
Why Buffett Would Stay Away
In an analysis published ahead of the IPO, Hogan argued that the proposed $1.77 trillion valuation and the company's financial profile make it unlikely to meet the investing principles Buffett has followed throughout his career. "While SpaceX has captured the imagination of investors globally, the company's financials are what truly matter. They are the core reason Buffett almost certainly will sit this one out," Hogan wrote.
SpaceX is set to go public at a valuation that has already drawn scrutiny from some analysts and market observers. The company generated $18.7 billion in revenue in 2025, up from $14 billion a year earlier. However, according to its filing, net income shifted from a profit of $791 million in 2024 to a net loss of $4.9 billion in 2025. Hogan argued that Buffett's long-standing preference for understandable businesses with clear economics would make SpaceX a difficult investment to justify.
Key Concerns for Value Investors
According to Hogan, SpaceX's structure, long-term ambitions, and financial performance could raise concerns for a value-focused investor like Buffett. "Buffett's first rule of investing is to only buy companies that you understand," she wrote, noting that SpaceX combines rocket launches with a growing network of subsidiaries and projects spanning satellite internet, artificial intelligence, and other ventures.
She also pointed to statements in the company's prospectus that discuss broader goals such as multiplanetary living, arguing that they make the company's future direction harder to evaluate. Another factor is Elon Musk's central role within the company. Hogan noted that Musk remains CEO, chief technology officer, and chairman, creating what she described as key-person risk if his attention is divided among multiple businesses.
Valuation Under Scrutiny
The valuation itself has also been questioned by several analysts. Research firm Morningstar estimated SpaceX's value at roughly $780 billion, significantly below its IPO valuation. Morningstar analyst Nicolas Owens recently wrote that the company’s assessment was based on mathematical projections across multiple future scenarios rather than scepticism alone. Similarly, finance professor Aswath Damodaran of New York University's Stern School of Business told The Wall Street Journal that SpaceX may be worth closer to 70% of the value implied by the offering price.
What Buffett Might Do Instead
Rather than purchasing SpaceX shares directly at the IPO price, Hogan suggested that Buffett would likely prefer investing in established, profitable companies that already hold stakes in the aerospace company. "There are other ways to gain exposure to SpaceX without taking on extreme volatility and risk," Hogan wrote. She highlighted Google-parent Alphabet, which previously invested nearly $1 billion in SpaceX, as one example. Financial institutions that invested in the company during earlier funding rounds could also provide indirect exposure while offering investors more diversified businesses.
"This is an approach Buffett might prefer to participating in the IPO directly," Hogan said. Buffett's investment style is based on long-term fundamentals rather than the market excitement surrounding high-profile public offerings, the analyst pointed out. "Buffett sees companies for what they are and never let short-term noise cloud his decisions. Until SpaceX's financials make sense, you probably won't see Buffett touching the shares," she added.
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