Bearish bets jumped to 13% of the float as the stock slid from its high
Less than two weeks after the largest stock market debut in history, SpaceX has become one of Wall Street's fastest-growing short targets, with bearish bets piling up almost as quickly as the stock has fallen.
Short sellers raised their wagers against Elon Musk's rocket-and-AI company after a sharp slide from its post-debut highs, according to data and analytics firm Ortex Technologies.
SpaceX's short interest climbed to 13 percent of its public float on Wednesday, up from 8 percent the prior session, Ortex said.
“Short interest in SpaceX is building remarkably fast for a stock that has only been public a couple of weeks,” Ortex co-founder Peter Hillerberg told Reuters.
He attributed the pace to the stock's roughly 30 percent drop from a high of US$225.64, reached days after its June 12 debut, amid a wider tech selloff.
The valuation is what makes SpaceX such a magnet for bears.
Reuters reported the company trades at about 141 times 2025 revenue, and that its US$2tn valuation makes it a target for short sellers, though strong retail and institutional interest and Musk's history of public battles against short sellers make that a risky proposition.
For investors weighing exposure, the float itself is a key risk: Hillerberg told Reuters that with short interest at about 83m shares against average daily volume of about 270m, a rush to buy back shares could trigger a squeeze.
“That kind of forced buying can land right on top of any rally and accelerate it well beyond what the fundamentals alone would justify, which is the classic short squeeze dynamic,” he said.
The bearish positioning followed a volatile stretch.
As reported by CNBC, the shares closed nearly 1 percent higher on Tuesday, snapping a three-day skid that erased nearly 24 percent and briefly pushed the market capitalization below US$2tn.
That followed a US$400bn sell-off on Monday, when the stock fell 16 percent.
Reuters reported the shares finished Tuesday up 6 percent at US$164.30 after touching US$147.11, as Nvidia dropped back below US$5tn and the Nasdaq composite shed hundreds of billions of dollars.
Analysts told Reuters the swings do not reflect a fundamental shift in how investors view the company, citing the flood of information before the record IPO and the silence since.
The offering size varies by source: Reuters described it as a record US$75bn IPO, while CNBC put it at nearly US$86bn including the underwriters' option.
The stock surged more than 50 percent on its offering price after the debut, briefly passing Amazon and Microsoft before falling back and by the end of last week the average buyer had seen nearly all those gains disappear.
“The options activity has gotten more balanced. It's not as completely euphoric as it was day one,” Steve Sosnick, chief strategist at Interactive Brokers, told Reuters, noting some traders view the US$150 opening price and US$135 IPO price as pain points.
As per Susquehanna Financial Group strategist Christopher Jacobson, options data ascribe about a 40 percent probability to the stock trading below US$130 by mid-September.
Contracts expiring July through September with strikes from US$125 to US$190 show nearly two puts for each open call, LSEG data showed, pointing to defensive positioning.
Despite the selling, the cost to short remains low.
According to Ortex, the cost to borrow SpaceX shares sits at about 1 percent, down from as high as 14 percent at the open, while utilization stood at about 39 percent, signalling ample supply still available to lend.
By comparison, the Magnificent Seven are hardly shorted, with only about 1 percent to 3 percent of their floats sold short.
Several catalysts could move the stock in the coming days, Reuters reported.
FTSE Russell is expected to add SpaceX to its Russell indexes on Friday, a move that could draw US$2.68bn in passive inflows, with a Nasdaq 100 addition expected July 6.
The quiet period limiting research by the IPO's underwriters ends July 7, and the company has scheduled the 13th flight of its Starship for June 29.
Investors told Reuters that index additions are likely to support the stock, but that it is impossible to say how any catalyst will play out in a hot market for AI-related shares.
Lockups could shape selling pressure too.
While most newly public companies restrict insider sales for roughly six months, SpaceX created exceptions for some participants and plans a phased release of restricted shares tied partly to performance and stock-price targets.
Some shareholders could begin selling shortly after the company's first quarterly earnings, provided certain conditions are met.
SpaceX moved fast to raise more capital.
CNBC reported the company raised US$25bn in a debt sale, drawing nearly US$90bn in orders, with Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, and Morgan Stanley managing the offering.
The bonds priced in five tranches due between 2031 and 2056, at rates from 5.35 percent to 6.65 percent, ranking among the largest bond sales of the AI era.
SpaceX disclosed it held US$100.8bn in cash as of June 19 and the company said it intends to use the proceeds to repay its bridge loan and for general corporate purposes.
The capital is needed because most of the business loses money.
CNBC reported that Starlink is the only profitable part of SpaceX, and that the company has accumulated a total loss of US$41.3bn since its founding in 2002, citing the prospectus.
The cash is funding Starship development, Starlink's expansion and a range of AI initiatives, including a US$60bn all-stock acquisition of coding startup Cursor.
Underlying the debate is a question about what SpaceX is now trying to be.
CNN reported that Musk argued for more than a decade against going public, warning it would make it too hard to focus on colonizing Mars.
Ahead of the IPO, the company acquired Grok creator xAI, set up a deal to buy Cursor and laid out plans for AI-processing data centres in space, a repositioning CNN said helped produce the record debut.
According to the company's S-1, Musk receives his full US$7.5tn pay package only if SpaceX establishes “a permanent human colony on Mars with at least one million inhabitants.”
Whether that goal survives Wall Street scrutiny divides observers.
Jay Ritter, a finance professor at the University of Florida, told CNN the Mars language is “just jokes” and possibly a way for Musk to make fun of his “excessive” pay package.
He does not advise retail investors to buy the stock now.
SpaceX is a strong company but not necessarily a strong investment, Ritter told CNN.
Its valuation assumes plenty will go right, he said, "and things don't always go according to plan."
Financial research firm Morningstar reached a similar conclusion, warning the company was overvalued and that only its most optimistic scenario, requiring a rapidly reusable Starship and competitive orbital data centres, approaches the IPO price.
That optimism rests on unproven technology.
CNN reported that Starship, the vehicle meant to carry astronauts, Starlink satellites and orbital data centres, remains in a lengthy test campaign with key features untested, including in-orbit refuelling with cryogenic propellants.
Test flights have occasionally ended in explosions, and it remains to be seen how the market would react to an explosive setback during trading hours.
