Short sellers pile into SpaceX ahead of earnings, lockup expiration

Investing.com -- Short sellers have increased their positions in SpaceX before two major events next week: the company's first earnings report as a public company and the release of hundreds of millions of locked-up shares.

Short interest reached 219.3 million shares as of July 29, equal to about 34% of the shares available for public trading, up from 23.3 million when the data was first reported on June 16, according to S3 Partners. The bearish position is worth $24.6 billion, exceeding the value of short bets against Tesla Inc., the other major public company led by Elon Musk.

"The big bet right now is on the unlock and effectively that there won't be anything announced on earnings that will overcome the volume of unlocked shares coming to market," said Sam Pierson, director of research at S3.

SpaceX is scheduled to report its first quarterly results as a public company on August 4, less than two months after its initial public offering. Two days later, as many as 911.5 million shares could become available for trading under the company's staggered lock-up arrangement.

The cost of betting against Musk's rocket, satellite and artificial intelligence company has also risen as short sellers position for those events.

"There is a little friction for shorts who want to keep the position on through next week, after that it is very likely the borrow cost will go back to being easy to borrow," Pierson added.

SpaceX currently has about 640 million shares available for trading, or roughly 5% of its total shares outstanding. The first lock-up expiration will more than double that proportion to about 12%, according to S3.

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