Informed Sellers: Wall Street, early venture capitalists, and company insiders have been holding SpaceX for years. Their lockup periods will expire over the next few months, meaning they are incentivized to keep the stock price as high as possible.

Negotiated Deals vs. Auction Markets: Buffett notes that an IPO is a negotiated transaction. The seller picks the absolute best time for them to cash in and sell to you—not when it's a bargain for the buyer. True bargains happen in standard public auction markets where individual market panic forces people to sell cheap. Retail investors buying the hype risk becoming "exit liquidity".

Lack of Profitability: SpaceX is in a massive hyper-growth phase and is currently unprofitable, with no signs of turning a profit anytime soon.

The Valuation Math: Using Buffett's conservative rule of thumb—expecting a large business to earn roughly 10% pre-tax on its valuation within 5 years—a $2.64 trillion market cap means SpaceX would need to clear $260 billion in annual earnings in 5 years. For context, its fiscal 2025 revenue was just $18.6 billion.

Stock as Currency: SpaceX just announced an all-stock acquisition of Cursor AI for $60 billion. When a company eagerly uses its own stock as currency for massive acquisitions, it's a clear sign management knows their shares are severely overvalued.

Uber: Went public at an $89 billion valuation while unprofitable. However, 5 years later, it successfully scaled trailing free cash flow from -$2.5 billion to $9.8 billion. Because it hit those financial metrics, the stock is up 49% from its IPO price.

Lyft: Went public at an $18.5 billion valuation while losing $500 million. Five years later, it only generated $1.1 billion in annual free cash flow. The result? The stock collapsed 75%.