Short sellers load up against SpaceX as stock retreats back to IPO price

Short sellers are rapidly increasing their counter bets SpaceXThis causes bearish sentiment to extend to almost a third of the company’s free float as struggling shares hover around its IPO price.

According to S3 Partners, approximately 185 million SpaceX shares are currently sold short; This represents about 29% of the company’s publicly traded shares and about $25 billion in bearish bets. The position has ballooned from an estimated 40 million shares, or roughly 5% to 7% of the IPO, just three weeks ago.

“We’ve seen continued demand from short sellers building speculative positions since the IPO,” S3 head of research Matthew Unterman told CNBC.

The rise in short-term interest comes as SpaceX shares are struggling after an initial strong run. The stock fell nearly 20% in July and fell below its $135 IPO price for the first time on Wednesday. The shares were last traded at $136 each.

The bearish positioning comes ahead of a closely watched lockdown program that could significantly increase the number of shares available for trading in the coming months. SpaceX’s initial public offering represents just 5% of its approximately 13 billion shares outstanding, with the vast majority of shares still remaining subject to lock-up restrictions, according to KeyBanc Capital Markets.

KeyBanc estimated that the first major lock could be around 11% of outstanding shares becoming available for sale around the company’s second-quarter earnings report.

The firm said additional tranches of about 4% each are planned to be released around the 70th day after the IPO, followed by further unlocks based on performance milestones and third-quarter earnings.

The largest block remains Elon Musk’s stake, representing about 42% of outstanding shares, which are locked in until June 2027.

of the company 13. Starship test flight It’s a catalyst that could affect sentiment for the stock, scheduled for Thursday.