The SpaceX IPO Could Crush This Favorite Buffett Stock

It's been less than a month since SpaceX filed confidentially to go public, and excitement is high.

The space exploration company is set to be the biggest IPO in history, targeting a valuation of as high as $2 trillion, and it could raise $75 billion.

The Elon Musk-led company is known for its reusable rockets and Starlink satellite internet service, as well as its recent merger with xAI, the owner of the X social media business and the Grok AI chatbot.

Starlink, the leading satellite internet company, is the source of most of the company's revenue, which reached around $15 billion-$16 billion last year, and its success is putting SpaceX on a collision course with a favorite Warren Buffett stock, Sirius XM (NASDAQ: SIRI), the satellite radio company. At the end of 2025, when Buffett stepped down as CEO, Berkshire Hathaway owned 124.8 million shares of SiriusXM, which were valued at $2.5 billion.

In some ways, SiriusXM looks like a classic Buffett stock. It's the only satellite radio operator in the country, and it trades at a low valuation with a dividend yield of 4.1%.

However, the stock has struggled in recent years as its growth has been essentially flat. Now, the SpaceX IPO could squeeze SiriusXM even further.

Image source: Getty Images.

How Starlink competes with SiriusXM Radio

Sirius is the only satellite radio company, but internet radio, such as Spotify, has overtaken satellite radio, and Starlink gives users convenient access to the internet radio provider of their choice with the reach of satellite internet.

SiriusXM is most often used the car, but Starlink is available in vehicles as well. Starlink prices start at $50/month, making it considerably more expensive than SiriusXM, which typically costs around $26/month for the full package.

Still, if you're out of reach of conventional internet options, then paying for Starlink makes sense. If a user has Starlink for internet, they'd likely use it for music and audio entertainment, making them unlikely to be a SiriusXM subscriber.

Why the IPO could pressure SiriusXM

SpaceX hasn't filed its S-1 yet so we don't know what its plans are to spend its capital, but some of the funds are likely to go to beefing up Starlink's capabilities, and that could grab more market share from SiriusXM.

Considering that Sirius is already struggling to grow, any weakness could be devastating for the stock as investors sense it shifting to perpetual decline. While that change won't happen overnight, if Starlink continues to grow, some of that growth will come at Sirius's expense. We'll learn more when SpaceX files its S-1 prospectus, which is expected in the coming weeks.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Spotify Technology. The Motley Fool has a disclosure policy.