Key Highlights

  • Short interest in SpaceX fell to about 11% of its publicly traded shares Wednesday, down from a peak of 34% the previous week
  • The decline reflects both short covering and a significant expansion of the stock's tradable float following the first major lockup expiration
  • SpaceX shares jumped 11% Wednesday to around $148, about 10% above its IPO price and roughly 41% above its August 3 low
  • Additional share unlocks are scheduled for August 20 and September, which could create fresh Volatility in the stock

Short Sellers Retreat as SpaceX Shares Rebound

Short sellers betting against SpaceX are rapidly retreating from the trade just as the newly public stock rebounds from its post-IPO slump. Short interest in SpaceX fell to about 11% of the company's publicly traded shares Wednesday, down sharply from a peak of 34% the previous week, according to data from a securities finance analytics firm. The decline reflects a combination of bearish investors closing out positions and a significant expansion of the stock's tradable float following the first major lockup expiration.

A managing director at the analytics firm said short sellers who wanted to bet against the stock have largely run out of Capital to deploy in the trade, noting there is only so much money that can be put into a single position. The exodus came as SpaceX shares staged a sharp rebound from their post-earnings sell-off, with short covering potentially amplifying the advance, since investors closing bearish positions must buy back shares to do so.

Lockup Expiration Expands Tradable Float

Shares jumped 11% Wednesday to around $148, lifting the stock about 10% above its $135 initial public offering price and roughly 41% above its August 3 low. SpaceX has experienced a volatile ride since going public, with the stock initially tumbling after the company disclosed in its first Earnings report that capital expenditures were more than twice its revenue, fueling concerns about the scale of spending required to fund its ambitions.

That sell-off attracted a wave of short sellers, pushing short interest to unusually elevated levels relative to the stock's limited public float. The dynamic changed substantially last Thursday, when just over 911 million SpaceX shares became eligible for trading following the expiration of an initial lockup period, a Tranche representing roughly 7% of the company's shares outstanding and exceeding the shares sold in the IPO itself. The larger float mechanically reduced short interest as a percentage of tradable shares, though short covering also contributed meaningfully to the decline.

More Share Unlocks Could Bring Fresh Volatility

Additional Supply is on the way. On August 20, another 319 million shares could unlock, followed by roughly 700 million shares in September and a similar amount in October, according to the company's prospectus. The additional shares could create fresh volatility by giving employees and early investors more opportunities to sell, while a larger float would also make it easier for investors to establish new short positions if bearish sentiment returns.