“The survival probability of firms who maintain a significant short position in SpaceX over time is very low,” SpaceX (NASDAQ: SPCX) CEO Elon Musk wrote in a post on X last week.
“I said SpaceX will be worth more than Earth if we achieve our goals.
Obviously true.”
About 206 million SpaceX shares are now sold short, according to estimates from S3 Partners.
That’s roughly 32% of the company’s publicly tradable shares, and about $25 billion in bearish beTS. The position is growing fast, too: The short count is up from about 185 million shares just last week, and a month ago the estimate was around 40 million shares.
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The market took its time coming around.
Shares rose about 3% on Tuesday to close at $123.46, snapping a seven-session losing streak.
So are the short sellers really trapped? Or is a one-day bounce in a stock trading about 45% below its post-IPO high just short-term covering?
The bet against SpaceX got crowded fast
The short position didn’t build slowly.
S3 said short sellers have been adding exposure ahead of several key catalysts, including the company’s first earnings report as a public company and the lock-up expirations that follow it.
That report now has a date.
SpaceX has confirmed it will release its first quarterly results after the market closes on Aug.
4.
Lock-up restrictions begin expiring shortly after, which could put a wave of insider shares on the market for the first time since the company’s June initial public offering (IPO).
The stock’s slide explains the bears’ confidence.
SpaceX went public at $135 per share, briefly traded as high as $225.64, and closed Monday at $119.85, a new low.
And the fundamentals give skeptics something to work with.
The company generated about $19 billion of revenue over the trailing 12 months, up 33% year over year.
That’s impressive growth, but it’s attached to a market capitalization of about $1.6 trillion.
The stock trades at more than 80 times sales, and the business is still losing billions of dollars a year.
The debate was never about whether SpaceX is impressive.
A company growing 33% at this scale clearly is.
The debate is how much of that future a $1.6 trillion market value already prices in.
What would actually force a squeeze
A short squeeze needs more than a big short position.
It needs shorts who are forced to buy back shares (because borrowing costs spike, losses pile up, or a catalyst destroys the downside case), and a thin supply of shares available for buying makes the scramble worse.
