Short sellers load up against SpaceX as stock drops below IPO price
SpaceX shares have retreated below their initial public offering (IPO) price as short sellers rapidly increase their bearish bets against the aerospace company. According to data from S3 Partners, approximately 185 million shares are now sold short, representing roughly 29% of the company’s publicly tradable float. This surge in bearish positioning represents about $25 billion in wagers against the company. Just three weeks ago, short interest stood at an estimated 40 million shares, or roughly 5% to 7% of the float. Matthew Unterman, head of research at S3, noted that the firm is seeing continuous demand from short sellers building speculative positions since the IPO.
Stock Performance and Market Sentiment
SpaceX priced its IPO at $135 per share. While the stock saw an initial debut that pushed prices as high as $150 and eventually past $200 in the following days, those gains have proven short-lived. The stock has declined by approximately 20% in July, and on Wednesday, it briefly slipped below the $135 IPO price for the first time. By Thursday, the stock was trading at approximately $131 per share. Ihor Dusaniwsky, a managing director at S3, described the situation as one of the highest levels of short selling for a company in its first month of being publicly traded. He attributed the trend to both the recent price weakness and the anticipation of upcoming lockup expirations. Market observers have pointed to several factors affecting investor confidence, including questions regarding the company’s path to profitability—following a loss of nearly $5 billion last year—and concerns over CEO Elon Musk’s vision, which includes a pivot toward building orbital AI data centers. Additionally, the company has faced scrutiny regarding the association between SpaceX and Musk’s AI startup, xAI, following controversies involving the Grok chatbot.
Impact of Impending Share Unlocks
A significant portion of the current market anxiety stems from the company’s lockup schedule. When SpaceX went public, only about 5% of its 13 billion outstanding shares were made available for trading to prevent immediate volatility. KeyBanc Capital Markets reports that the vast majority of the company’s stock remains subject to lockup restrictions. The market now faces a period where large blocks of shares will become eligible for sale: | Lockup Milestone | Expected Timeline | | :— | :— | | First major unlock | Around Q2 earnings report (approx. 11% of outstanding shares) | | Subsequent tranches | Beginning around Day 70 post-IPO (approx. 4% each) | | Final Musk stake unlock | June 2027 (approx. 42% of outstanding shares) | Analysts warn that the gradual release of these shares could introduce significant volatility. If investors choose to divest their holdings as these blocks become tradeable, it could place further downward pressure on the stock price.
Operational Catalysts
While financial analysts focus on the share structure and earnings, the company continues to maintain its operational schedule. A 13th Starship test flight is slated for Thursday. Market participants are viewing the test as a potential catalyst that could influence sentiment toward the shares, either bolstering confidence in the company’s core mission or providing further evidence for those betting against its current trajectory. As of mid-July 2026, the combination of waning enthusiasm, potential share dilution from upcoming unlocks, and broader questions regarding corporate strategy has left SpaceX in a precarious position as it navigates its first months as a public entity.
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