SpaceX Shorts Hit $25B as Musk Warns Sellers Ahead of Earnings

Woofun AI reports that a structural divergence has emerged in SpaceX’s post-IPO trading dynamics, characterized by aggressive bearish positioning against the backdrop of Elon Musk’s defiant public stance ahead of critical corporate milestones. As the aerospace giant approaches its first earnings report since going public and faces a historic unlock of restricted shares, the market has priced in significant downside risk, with short selling activity accelerating rapidly despite the company’s initial listing enthusiasm.

The current scale of bearish exposure is unprecedented for a newly public entity. Data from S3 Partners indicates that as of August 4, approximately 206 million shares of SpaceX (SPCX.O) were held in short positions. This volume represents roughly 32% of the company’s publicly traded float, translating to a notional short position value of around $25 billion. The concentration of these bets suggests that institutional investors are heavily wagering against near-term price stability, leveraging the upcoming earnings release as a primary catalyst for potential downside volatility.

The acceleration of this short interest reveals a sharp deviation from earlier market behavior. Just last week, the short position stood at about 185 million shares, accounting for 29% of the float. The trajectory becomes even more pronounced when viewed over a longer horizon; approximately a month earlier, the estimated short position was merely around 40 million shares, representing only 5% to 7% of the available supply. This exponential growth in short volume underscores a rapid shift in sentiment as key catalyst events draw nearer.

Matthew Unterman, head of research at S3 Partners, explained to CNBC that short sellers are continuously expanding their exposure in anticipation of specific structural triggers. He identified the company’s first earnings report as a public company and the subsequent expiration of the cliff period as the primary drivers. The cliff period expiration is particularly significant because it allows shares held by early investors to enter the open market, fundamentally altering the supply and demand equilibrium for the stock.

Woofun AI data shows that the magnitude of the upcoming supply shock is historically significant. On August 6, SpaceX will experience its first large-scale release of restricted shares since listing. At current valuation levels, this event involves up to 911.5 million previously restricted shares becoming available for sale for the first time. With a potential market cap impact of up to $116 billion, this constitutes one of the largest share releases in capital market history, coinciding precisely with the release of the company’s first quarterly results.

This initial unlock is merely the beginning of a prolonged supply expansion. By the end of this year, billions more shares will gradually become tradable through phased releases. Market participants are currently assessing how this unusual pace of liquidity injection will impact stock prices, overall liquidity, and broader market dynamics in the coming months. The sheer volume of new shares threatens to dilute existing holdings and exert sustained downward pressure on the stock price.

Investor behavior reflects a stark contrast between early stakeholders and speculative traders. Since completing the largest IPO in history last month, SpaceX’s stock price has failed to regain the initial listing enthusiasm. As more shares enter the market, early investors and those who bought the stock in the private market may seek to realize substantial returns, providing ample opportunity for short sellers to increase their bearish bets. This dynamic creates a perfect storm for price suppression as profit-taking meets aggressive shorting.

Elon Musk responded to the growing short selling activity with a direct warning on X. He stated that institutions holding large short positions in SpaceX have an "extremely low chance of surviving in the long term." Musk reinforced his bullish outlook by reiterating that if the company achieves its goals, SpaceX’s value will exceed that of Earth. While this statement reflects his usual high expectations for the company’s long-term potential, it does not resolve the current market disagreements regarding valuation and the immediate impact of the expanding float.

Stock performance has recently shown signs of stabilization amidst the volatility. SpaceX rose about 3% on Tuesday, ending seven consecutive days of decline. Analysts at Macquarie reiterated their "outperform" rating for the stock, advising investors to buy on dips following recent weakness. The stock price reached around $124 on that day, though it remains below its IPO price of $135. As the first earnings report approaches, bulls cite leadership in launch services, Starlink expansion, and artificial intelligence investments, while bears focus on valuation risks. The upcoming report will likely serve as the next major trigger for battles between bulls and bears.