Short Sellers Push SpaceX Bets to 32% of Float, Musk Says They Won't Survive

Shorts Keep Piling In Despite Musk's Warning

Short interest in SpaceX has climbed to about 32% of the company's publicly tradable float, up from 29% just a week earlier, according to estimates from S3 Partners cited by CNBC. That's roughly 206 million shares sold short, worth about $25 billion. A month ago, short interest sat at just 5% to 7% of the float, around 40 million shares. This is a fast, aggressive buildup.

Elon Musk isn't taking it quietly. He posted on X that "the survival probability of firms who maintain a significant short position in SpaceX over time is very low," and doubled down on his prediction that "SpaceX will be worth more than Earth if we achieve our goals." Musk has a habit of talking his own book loudly, and short sellers betting against him are a frequent target of his public taunts. His prediction is neither fact nor necessarily wrong, but it remains a prediction.

Tuesday's Bounce Doesn't Settle Anything

SpaceX shares had dropped for seven straight sessions before Tuesday, hitting an all-time low of $119.69 the prior session, according to FXEmpire. Tuesday brought a sharp reversal. CNBC put the gain around 3%, with shares near $124. Briefs Finance and FXEmpire reported a bigger move, with the stock closing around $128, up roughly 7% on the day. Either way, the stock remains below its $135 IPO price, meaning anyone who bought at the IPO and held is still sitting on a loss.

Macquarie reiterated an outperform rating Tuesday and told investors to buy the dip, according to CNBC. That's one bank's call, not a consensus. Skeptics are questioning how much future growth is already baked into SpaceX's valuation, which topped $2 trillion after the IPO before sliding to roughly $1.63 trillion, according to Pluang.

Why Short Sellers Think They Have an Edge

S3 Partners head of research Matthew Unterman told CNBC that short sellers are "adding exposure ahead of several key upcoming catalysts, including the company's first earnings report as a public company and subsequent lock-up expirations." SpaceX confirmed Tuesday it will report its first quarterly earnings as a public company after markets close on Aug. 4, according to CNBC. Two days later, on Aug. 6, roughly 20% of locked-up shares are expected to become tradable, part of a phased unlock covering more than 1.37 billion shares, according to Pluang.

More shares hitting the market usually pressure the price lower, especially if early employees and investors who've been sitting on paper gains since the IPO decide to cash out. An AI forecasting tool cited by Pluang projected a possible 4.8% decline by Aug. 1, to around $118. Forecasts like that are estimates, not guarantees, and this one has already been overtaken by Tuesday's rally.

The Bull Case Isn't Nothing

SpaceX still dominates the launch business with reusable Falcon rockets, and Starlink's satellite network keeps expanding, according to CNBC and Briefs Finance. Bulls also point to the company's artificial intelligence ambitions, according to CNBC, while skeptics keep asking how much of that future growth is already priced into the stock. SpaceX's first quarterly earnings report on Aug. 4, followed by the lock-up expiration on Aug. 6, will be the first real test of whether the bulls or the shorts have it right.