Post by : Badri Ariffin

Investors betting against SpaceX have reportedly gained about $15.5 billion following the company’s mid-June IPO, according to analytics firm Ortex Technologies. This profit surge coincides with the fall of the stock below its IPO price of $135, highlighting ongoing concerns surrounding its valuation.

The stock's decline has prompted a rise in short-selling activities, as investors are not pulling back their positions even as they secure substantial profits.

Post-IPO Stock Decrease Reflects Ongoing Concerns

Initially, SpaceX shares surged to a high of $225.64 post-IPO but have subsequently reversed, hitting new lows of $115.26, which continues to distance the share price from its IPO valuation.

Short selling involves borrowing shares, selling them at market value, and ideally repurchasing them later at a lower price to realize profit from the drop.

Increasing Short Positions Indicate Market Sentiment

Data reveals that investors betting against SpaceX show no signs of offloading their positions to take profits. Ortex's co-founder, Peter Hillerberg, noted, "Short sellers are not easing up on SpaceX."

According to Ortex, over 360 million SpaceX shares—about 56% of its free float—were out on loan by Tuesday, usually a sign of widespread short selling.

SpaceX has yet to issue a response to inquiries regarding this situation.

Musk’s Warning on Short Selling Risks

SpaceX CEO Elon Musk recently addressed the growing interest in short selling through a message on X. He cautioned that the long-term survival of firms holding significant short positions in SpaceX is bleak.

His comments come amid increased speculation from investors anticipating further stock declines.

Key Concerns: Valuation and AI Spending

The substantial market valuation of SpaceX renders it a prime target for short sellers who consider its shares overvalued. Nevertheless, the firm remains a magnet for both retail and institutional investors. Musk's history of confronting short sellers adds a layer of risk to these positions.

The ongoing downturn in SpaceX shares also reflects apprehensions regarding funding through debt for AI advancements, especially as Tesla, another Musk-led company, reported negative free cash flow for the first time in over two years due to extensive investments in AI technologies.

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