Key Points
Warren Buffett, the longtime CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), hasn’t weighed in on the SpaceX (NASDAQ: SPCX) IPO, but it’s worth considering what his thoughts might be.
After all, Buffett is generally regarded as the greatest investor of all time. Over a career of more than 60 years, he nearly doubled the average return of the S&P 500, delivering a total gain of 6,099,294% from 1964 to 2025.
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Though Buffett is no longer the CEO of Berkshire Hathaway, having stepped down at the end of last year, he remains the chairman of the trillion-dollar conglomerate, and his wisdom remains just as valuable as it would if he were the CEO.
While Buffett hasn’t commented specifically on SpaceX, he did discuss the Uber IPO in an interview back in 2019 when the ridesharing company went public, and many of those comments could easily be applied to the SpaceX IPO.
Image source: The Motley Fool.
What Buffett thinks about IPOs
In an interview with CNBC’s Becky Quick in 2019, Buffett said that Berkshire Hathaway hadn’t bought an IPO in the 54 years that he’d been running the company, and that he sees them as a misalignment of incentives.
He explained that the IPO process makes for a seller’s market, saying skeptically, “To say that the best place in the world to put my money is where all the selling incentives are there… that that’s going to be better than a thousand other things? That’s the single best thing to buy in a single day?” He was suspect of the commissions and incentives used to push IPOs as well.
Buffett and his longtime partner, Charlie Munger, also cast suspicion toward companies like Uber that had raised a lot of capital and spent, but were generating losses. The same could be said for SpaceX, which has raised and invested billions, but is still losing money following its merger with xAI.
Buffett’s simple litmus test for investing
Buffett also offered a simple test for deciding whether to buy stock. He advised writing down, “I’m buying (x) stock because…” and if you can’t give a good answer to that question, then you shouldn’t be buying the stock.
He explained that an answer like “my neighbor’s buying the stock” isn’t sufficient. The exercise is designed to be a check on irrational and impulsive decision-making, and requires the investor to make a strategic or fundamental argument for investing in the stock.
You don’t have to invest like Buffett
Buffett’s guidelines are best applied to investors who have a similar sensibility, who prefer value over growth investing, and like to invest in established industries and business models, rather than chasing riskier investments like IPOs and tech stocks.
Buffett is right that IPOs are risky and have a track record of underperforming, but that doesn’t mean that every one is a loser, as many of the best-performing stocks of all-time have started out as IPOs, including Tesla, the other public company run by SpaceX CEO Elon Musk.
The Berkshire chairman has expressed admiration for Musk, calling him “brilliant” and saying that he achieved the “impossible” by taking on the Detroit automakers and winning.
SpaceX is a unique company with long-term goals, including colonizing Mars, that investors have never seen before. If it can accomplish even half of those bold goals, the stock could rise several times over a long enough time period, though its current valuation bakes in high expectations.
It’s easy to see why a stock like SpaceX wouldn’t be for Buffett. It’s unprofitable, high-risk, and trades at a sky-high valuation. Buffett would never buy it, but that doesn’t necessarily mean that it’s a bad investment.
After all, the Berkshire leader has lamented missing out on past big tech winners like Amazon and Alphabet.
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Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Berkshire Hathaway, and Tesla. The Motley Fool has a disclosure policy.
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