SpaceX Short Interest Soars Ahead of Big Share Unlock, Earnings

(Bloomberg) -- Short sellers have piled into SpaceX at a rapid pace ahead of two major milestones next week: the company's first earnings report as a public company and the release of hundreds of millions of locked-up shares.

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Short interest stood at 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 Aug. 4, less than two months after its blockbuster 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.

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

"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.

The stock fell 3% to $108.83 at 12:48 p.m. in New York, about 19% below its IPO price.

"There are three key drivers to monitor over the next year," according to Pierson. "The unlock ladder is the nearest. S&P 500 entry is another — seasoning rules put it out to mid-2027 at the earliest, but the market is already handicapping it."

The third, Pierson adds, is a possible Tesla combination, "which would fast-track that inclusion."

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