It looked like SpaceX’s IPO would take investors to infinity and beyond. But right now, short sellers are the biggest winners.
Investors who bet against the stock are sitting on about $5 billion in paper profits after SpaceX’s record-breaking public offering gave way to a major share price slide, according to data from S3 Partners.
SpaceX stock surged in the aftermath of the company’s $86 billion IPO, with the rocket maker’s market cap briefly surpassing Amazon to become the world’s fifth-most valuable company.
Since then, however, SpaceX has lost around $1 trillion in value from its peak, despite a series of bullish price targets from analysts and major banks.
On Wednesday, SpaceX’s shares briefly fell beneath the IPO’s $135 offering price for the first time.
Shares fell again on Thursday, and the stock opened at around $127 on Friday after SpaceX called off a planned test of its Starship mega-rocket.
S3 Partners, a financial markets data provider, estimated that 192 million SpaceX shares — around 30% of the total float — have been sold short.
Matthew Unterman, a managing director at S3, told Business Insider in an email that bearish investors were doubling down on their short bets against SpaceX, with the notional value of short interest in SpaceX hitting $25 billion compared to $4.5 billion on June 15.
Elon Musk’s companies have often been a target for short sellers, much to the billionaire’s chagrin.
The world’s richest man has regularly attacked investors who bet against Tesla, and after short sellers lost a record $40 billion betting against the electric carmaker in 2020, he mocked them by selling red “short shorts” on Tesla’s website.
Peter Hillerberg, the cofounder of financial analytics platform Ortex, told Business Insider that SpaceX short sellers had been on a wild ride since the June 12 IPO.
The firm’s own estimates suggest short sellers swung from an on-paper $677 million loss in early June to an $8.7 billion profit at market close on Thursday, with Hillerberg warning that the volatility was likely to continue.
“SpaceX has been a rollercoaster for the short sellers, and it has ended up firmly in their favor,” he said.
