SpaceX Hit by Massive Short Selling One Month After IPO, Stock Falls Below Offering Price
Claire Weston
Just one month after its IPO, SpaceX shares have plunged roughly 40% from a mid-June intraday high of $225 to $123.99, breaking below the $135 offer price; short sellers have booked about $4 billion in paper gains as doubts deepen across both equity and debt markets.
A 40% drop in one month — what happened?
SpaceX stock broke below its $135 IPO price for the first time this week, closing Friday at $123.99 — down more than 5% on the day.
From the mid-June intraday peak of $225, the cumulative decline is roughly 40%. The IPO honeymoon has been almost entirely erased.
This means → the "belief premium" the market assigned to SpaceX is evaporating fast, with capital shifting from pursuit to defense.
Who is shorting, and how much have they made?
S3 Partners data show short sellers have booked roughly $4 billion in paper profits over the past month.
About 30% of SpaceX's 640 million tradable shares are now on loan for short selling — up roughly 10 percentage points from just 10 days ago.
In plain terms = one in every three tradable shares is being borrowed to bet on further declines, and the crowd is growing fast.
What is the core short thesis?
Roughly 900 million lock-up shares could hit the market as early as next month. This means → the supply of sellable stock is about to surge, and the overhang is imminent.
One North American hedge-fund CIO put it bluntly: "Even if SpaceX announces a moon landing and finds gold up there, there isn't enough money in the market to absorb those shares."
That fund reportedly netted about $20 million shorting SpaceX in early July. This reflects a view that is no longer contrarian — it is becoming consensus.
Is the bond market flashing warnings too?
SpaceX's 30-year bond yield has climbed from 6.7% at issuance to 7.4%, with the bond price falling to about 91% of face value.
In plain terms = a higher yield means the market demands more compensation for risk — 7.4% is approaching junk-rated borrower territory.
Credit default swaps — CDS, essentially "default insurance" on the bonds — are quoted at 158 basis points, meaning annual protection on $10 million of debt costs about $158,000, up from roughly $110,000 in late June.
What is the bigger picture?
The sell-off comes amid a broader tech pullback — U.S. semiconductor stocks posted their worst weekly performance since last year's "Liberation Day" market turmoil.
SLC Management managing director Dec Mullarkey said "investor enthusiasm for SpaceX seems to have cooled," with stocks and bonds now "pricing in more risk."
This means → whether the market can absorb the new supply when the lock-up expires next month will be the decisive test of the short thesis.
Content is for reference only, not financial advice.