SpaceX short sellers pocket $5 billion in paper profits as stock wipes out $1 trillion in value
SpaceX’s blockbuster IPO may have grabbed the headlines, but the stock’s sharp decline since listing has made short sellers the biggest winners in the game. They currently generate about $5 billion in profits on paper, according to financial markets data provider S3 Partners.
Elon Musk’s companies are targeted by short sellers
The firm estimated that 192 million SpaceX shares (about 30% of the total IPO) were sold short.
S3 managing director Matthew Unterman told Business Insider that bearish investors have doubled their short positions against SpaceX, with the notional value of short interest in the company rising from $4.5 billion to $25 billion on June 15.
In fact, Elon Musk’s companies are often the target of short bets.
Peter Hillerberg, co-founder of financial analysis platform Ortex, told Business Insider that SpaceX’s short sellers have been on a wild ride since its June 12 IPO. They went from a $677 million loss on paper in early June to an unrealized profit of $8.7 billion by Thursday’s market close, according to the firm’s estimates. Hillerberg notes that volatility will likely continue.
“SpaceX has been a rollercoaster for short sellers, and it definitely worked out in their favor,” he said.
SpaceX wiped more than $1 trillion from its market value
SpaceX shares tumbled on Friday, wiping more than $1 trillion in market value from the rocket and artificial intelligence giant’s all-time high.
The stock fell 5.4% to $123.99 per share, bringing the company’s market value to $1.63 trillion. The value was at $2.64 trillion at the close of June 16, the third trading day.
Elon Musk’s official name is Space Exploration Technologies Corp. His company, known as , initially rebounded after the largest IPO in history, but has since lost ground and is trading below its $135 IPO price. Friday’s drop came after the company canceled the launch of its Starship rocket due to engine trouble.
Wall Street remains largely bullish on SpaceX despite selloff
Despite the recent selloff, Wall Street remains largely bullish, and more than 80% of analysts tracked by Bloomberg rate the stock as the equivalent of a buy. The average price target of $235.34 suggests an upside of approximately 90% from current levels.
The company, which joined the Nasdaq 100 Index earlier this month, faces a prolonged lock-in for insiders, with shares hitting the market periodically in the coming months.
“Given the lock-ups expiring in the future, many investors have likely rethought their initial thesis, and potential investors watching from the sidelines are waiting for lower entry points that have a good chance of emerging as valuation becomes accurate,” said Mark Malek, chief investment officer at Siebert Financial.
