Space Exploration Technologies Corp (NASDAQ:SPCX) had the largest IPO in history in June, opening at $135 per share and momentarily reaching a $2.1 trillion value, and in the five weeks since, it has been the most widely shorted newly listed stock Wall Street has ever tracked. Short interest has increased from roughly 40 million shares (5-7% of the tradable float) a month ago to over 206 million shares today, representing around 32% of the float and $25 billion in notional bearish bets, according to S3 Partners.
Lockup Expirations Are Fueling Bearish Bets
The mechanisms driving that bearish pileup are concrete rather than sentiment-driven. Space Exploration Technologies Corp (NASDAQ:SPCX) released fewer than 5% of total shares into the public float when it listed, employing a staggered unlock schedule rather than a traditional single lockup, with around 7% tranches on days 70, 90, 105, 120, and 135 post-IPO. The first significant wave will come two trading days after the company’s first earnings report, due on August 4, releasing 911.5 million shares unconditionally on August 6.
A second tranche of 455.8 million shares (about $62 billion) is conditional on the stock closing at or above $175.50 on five of the 10 trading days leading up to results. With shares trading at $123.54 as of July 21, down 40% from the June 16 intraday high of $225.64, that threshold appears to be out of reach, implying that the smaller, unconditional tranche will be in play in early August instead.
S3 Partners’ analysts have identified recent share-price decline and the impending lockup as the primary drivers of increased short-selling interest. However, Musk pushed back directly on X, claiming that firms with substantial short interests in SpaceX will rarely survive over time. He wrote the following:
“The survival probability of firms who maintain a significant short position in SpaceX over time is very low. I said SpaceX will be worth more than Earth if we achieve our goals. Obviously true.”
All Eyes Turn to SpaceX’s First Earnings Report
SpaceX confirmed on July 21 that it will issue its first quarterly earnings report as a public company after the US market closes on August 4. The data will provide investors with their first detailed look at SpaceX’s performance since its IPO, and they may serve as a fresh test for both bulls and short sellers. The first earnings report will allow investors to sell 20% of their qualifying locked-up stock, up to 911.5 million shares, on the second full trading day after the first earnings release date.
The Verdict
That said, aggressive short sellers holding $25 billion in bearish positions are taking on substantial tail risk. Given the extremely high short interest relative to the current float, any unexpected positive surprise or lighter-than-expected insider selling post-lockup could trigger a violent short squeeze. For strategic traders, buying immediately ahead of the August 6 lockup release carries unneeded headline risk. The smart strategy would be to wait for the post-earnings supply inflow to pass, allowing short-term selling to run its course before setting or growing long positions in a world-class asset at a discounted price.
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