Short interest in SpaceX rises as shares hover near IPO price

Short sellers have lifted bets against SpaceX to about 185 million shares, equal to roughly 29% of the company’s public float and about $25 billion in bearish positioning, according to S3 Partners. The rise comes as SpaceX shares trade close to their $135 initial public offering price after falling about 20% in July, CNBC reported.

The scale of the short interest marks a rapid change from three weeks earlier, when S3 estimated that about 40 million shares were sold short, or around 5% to 7% of the float. Matthew Unterman, S3’s head of research, told CNBC that demand from short sellers has continued to build since the IPO as traders establish speculative positions against the stock.

SpaceX shares briefly moved below the IPO price on Wednesday for the first time since the listing, according to CNBC, and were most recently trading around $136 a share. The company trades under the ticker SPCX.

How the short trade works

Short selling involves borrowing shares and selling them in the market with the aim of buying them back later at a lower price. If the share price falls, the short seller can return the borrowed stock and keep the difference, before costs. If the price rises, losses can increase because the investor must still repurchase the shares to close the position.

Short interest as a share of float is closely watched because it measures bearish positioning against the stock that is actually available for public trading. A high reading can signal broad skepticism among short sellers, but it can also create sensitivity to sharp upward moves if traders seek to cover positions by buying shares back.

Lockups may expand the tradable supply

The trading setup is being shaped by SpaceX’s post-IPO lockup structure. KeyBanc Capital Markets said the initial public float represented only about 5% of the company’s roughly 13 billion shares outstanding, leaving most of the equity subject to restrictions on sale.

KeyBanc estimated that the first large release of locked-up shares could occur around SpaceX’s second-quarter earnings report, when about 11% of outstanding shares may become eligible for sale. The firm said additional blocks of about 4% each are expected to become available beginning around the 70th day after the IPO, with further releases linked to performance milestones and third-quarter results.

The largest restricted holding is Elon Musk’s stake, which KeyBanc said represents about 42% of shares outstanding. That stake remains locked up until June 2027, according to the firm.

Lockups are common in IPOs and are designed to limit immediate selling by insiders and early investors. When restrictions expire, the tradable supply can increase, although eligibility to sell does not mean holders will sell.

SpaceX has another event on its calendar this week. The company says its 13th Starship test flight is scheduled for Thursday.

This story draws on original reporting from CNBC.