Short sellers are winning big against SpaceX: $8.7 billion and counting

Short sellers betting against SpaceX have accumulated an estimated $8.7 billion in unrealised gains since the company’s initial public offering last month, as per a recent Reuters report.

The report quoted data from analytics firm Ortex Technologies, as SpaceX’s stock slipped below its IPO price of $135 following a sharp fall on Friday. Investors taking short positions — who borrow shares, sell them and later seek to repurchase them at a lower price to book a profit — have continued to increase their bearish wagers as SpaceX shares retreated from their post-listing high of $225.64 toward the IPO price.

‘SpaceX has been a rollercoaster for the short sellers, and it has ended up firmly in their favor,’ Ortex co-founder Peter Hillerberg said. ‘Rather than take profits, the bears kept adding the whole way down.’

According to Ortex, nearly 49% of SpaceX’s free float, or almost half of the shares available for trading, is currently on loan. ‘We believe most of that is short selling,’ Hillerberg reportedly said.

Friday’s slide saw the stock drop as much as 6.9% in early US trading to $122.12 a share before recovering some of its losses, taking the company’s market value to $1.61 trillion, down from its record high of $2.64 trillion seen at the close of June 16. The decline followed SpaceX’s decision to abort the launch of its Starship rocket over an engine-related problem, with another attempt planned within days.

SpaceX’s high market valuation has made it an attractive target for investors who believe the stock is overpriced. At the same time, strong participation from retail and institutional investors, combined with founder Elon Musk’s long history of publicly confronting short sellers, continues to make bearish bets on the company a high-risk strategy.

Wikimedia Commons/by Steve Jurvetson