US Stock Market: Heavy short selling puts spotlight on SpaceX's volatile post-IPO journey

Short sellers have sharply increased their bearish positions on SpaceX, with nearly one-third of the company's tradable shares now sold short, even as those positions have generated significant paper losses following the stock's recent rebound.

According to data from Ortex, short interest in SpaceX has climbed to around 196 million shares, representing approximately 31% of the company's free float as of Tuesday. Just a week earlier, short interest stood at about 83 million shares, or roughly 13% of the free float, highlighting a rapid increase in bearish wagers since the company's June 12 market debut.

The growing short position could add to volatility in SpaceX's shares. Ortex estimates that every $1 movement in the stock price results in approximately $200 million in gains or losses for short sellers due to the scale of outstanding bearish positions.


Short sellers initially gained confidence after SpaceX's strong post-listing performance reversed, with the stock falling as much as 23% in the days following its debut. However, the subsequent recovery in the share price has erased those gains.

Ortex estimates that short sellers have accumulated mark-to-market losses of roughly $760 million since the initial public offering. At the stock's recent low near $153, bearish investors were sitting on paper profits of nearly $2.5 billion before the rebound wiped out those gains.

Reuters reported that the rapid increase in short interest is unusual for a company that has been publicly traded for less than a month. SpaceX's valuation of more than $2 trillion has attracted investors betting that the stock is overvalued. However, continued interest from both retail and institutional investors has made those bearish positions increasingly risky.

Despite the surge in short selling, the cost of borrowing SpaceX shares remains relatively low at around 1%, according to Ortex data cited by Reuters. The low borrowing cost indicates that shares available for lending remain sufficient even as demand to short the stock has risen.

Analysts note that if SpaceX's shares continue to recover, the high level of short interest could trigger a short-covering rally. In such a scenario, investors betting against the stock may be forced to buy back shares to limit losses, potentially driving the stock price even higher.