I was with you on the first part, in other industries such a loss making company might have difficulties going public.

But lost you on the second part. It's not for the SEC (in my opinion) to police who can and can't go private in terms of how their busines is doing.

That's for investors to assess when deciding whether, or not, to buy shares.

The SEC's concerns should (again IMO) focus on whether the company seeking to IPO has been truthful in their prospectus. As long as they're not misleading investors, that's fine.