Space Exploration Technologies faces heavy short interest following its public debut, prompting CEO Elon Musk to warn on X that short-sellers have a low survival probability. As shares retreat below their initial trading peak, analysts debate whether near-term market trends or long-term growth will dictate the outcome.
Founder and CEO Elon Musk raised $85 billion, and the stock’s initial debut price of $135 a share quickly surged past $175 during its first day of trading. Since that opening high, however, the momentum has reversed entirely. Shares have fallen about 36% from their intraday peak, drawing a massive wave of bearish bets from traders looking to profit on the way down.
That short interest sits well above the typical market average of 5%, turning the recent market pullback into a lucrative trade for pessimistic investors.
Elon Musk Warns Short-Sellers on X While S3 Partners Flags Super Bearish Momentum
Faced with a sinking stock price and mounting bearish interest, Elon Musk took to his social media platform X to issue a stark warning to those betting against the aerospace and satellite internet company. Musk wrote that the survival probability of firms who maintain a significant short position in SpaceX over time is very low,
suggesting that the ongoing bearish trades are bound to backfire as the stock eventually rallies.
“The survival probability of firms who maintain a significant short position in SpaceX over time is very low.”
Elon Musk, CEO of SpaceX, via The Fool
Market analysts see different motivations behind the warning. Musk personally owns nearly half of the company’s stock.
On the other side of the trade, financial analysts note that the heavy short interest reflects genuine risk in the equity. Bob Sloan, founder of S3 Partners, described the growing short interest in the company as a super bearish
sign in an interview covered by the New York Post.
Upcoming August Earnings and the Post-IPO Lockup Expiration
Short-sellers are maintaining their positions as the calendar turns toward a pair of critical catalysts in early August. Analysts anticipate those earnings will reflect startup-phase losses, a reality that is already factored into a share price hovering around $112, down significantly from its post-IPO highs.
Adding to the near-term downward pressure, the company’s first lockup period expires just two days after earnings on August 6. The expiration will allow initial insider shareholders to sell as much as 911.5 million shares—an amount exceeding the entire existing public float. Sensing an opportunity, short-sellers added 37.7 million shares to their negative bets during just the first two days of the week, according to data from S3 Partners cited by the New York Post.
Broader Tech Sentiment and the Historical Parallel to Tesla
Beyond company-specific catalysts, SpaceX is facing headwinds from its association with the artificial intelligence sector. Investor skepticism regarding lofty valuations and the mounting expenses required to construct massive data centers has triggered a broader tech pullback. That sector selloff recently impacted high-profile funds like Situational Awareness, a $20 billion hedge fund that had served as a bellwether for the space.
Despite the immediate bearish momentum, market historians point out the risks of betting against Elon Musk over long horizons. Back in 2018, short-sellers enjoyed a field day betting against Tesla amid questions regarding production schedules, accounting practices, and executive behavior, only to be caught off guard when the company reversed course and became a market darling.
Statistical context from Nasdaq Economic Research indicates that between 2010 and 2020, over half of newly public stocks traded below their initial offering price six months after their market debuts. Brokerage firm Edward Jones similarly reported that technology IPOs from that era averaged a 14% decline over the same six-month window.
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