Short sellers lose $7 billion betting against SpaceX stock

Short sellers have lost more than $7 billion betting against SpaceX, as the Elon Musk-led company's stock defied bearish bets after its June IPO.

Short sellers have lost more than $7 billion betting against SpaceX, as the commercial spaceflight company's stock rallied after its June initial public offering, a research firm said.

"We consider ourselves long-term holders and believe SpaceX will be the world's biggest company," Ron Baron, founder of Baron Capital, said. His firm's $25 billion stake could still rise 30-fold despite the stock's post-IPO pullback, he said.

SpaceX, which trades on the Nasdaq under SPCX, debuted at $135 per share in June and surged to above $225 before retreating to about $110. The company has a market capitalization of roughly $1.45 trillion. Its public float of 281 million shares represents just 2.1 percent of the total diluted share count, leaving the stock prone to sharp moves as short sellers cover positions.

The $7 billion in short-seller losses shows extreme bullish momentum that could drive further short covering and push prices higher. A large portion of insider lockup provisions is set to expire on Dec. 8, which could add supply and test the stock's valuation.

A $1.45 Trillion Valuation Tested by Lockup Expiration

SpaceX's valuation — at about 19.8 times estimated 2027 sales of $73.1 billion and roughly 169 times projected 2027 earnings of $0.65 per share — remains elevated by traditional measures, according to sell-side consensus. Morningstar's discounted cash flow model values the company at about $780 million, less than half its current market cap, suggesting the stock could face further downside if fundamentals fail to catch up to the price.

The stock's limited float magnifies price swings. With only 2.1 percent of shares available for public trading, even modest buying pressure can trigger outsized moves, forcing short sellers to cover at unfavorable prices. The dynamic mirrors patterns seen in other high-profile Musk-related stocks, where concentrated ownership and retail interest have produced sharp rallies.

The Dec. 8 lockup expiration represents the next major test for SpaceX stock. If insiders sell a significant portion of their holdings, the increased supply could pressure the stock price and validate the bearish thesis that short sellers have bet against. Conversely, if holders maintain their positions, the limited float could continue to fuel upward momentum. Baron Capital's Ron Baron has said he expects his $25 billion stake to rise 30-fold over time, betting that SpaceX will dominate both space launch and satellite communications.

The short-seller losses also highlight the growing divide between traditional valuation metrics and the market's willingness to price in future growth for companies tied to Musk. SpaceX's Starlink satellite internet business, which generates recurring revenue from millions of subscribers, provides a tangible revenue stream that bulls argue justifies the premium. The company's dominance in commercial space launch, with its reusable Falcon rockets, gives it a competitive moat that few rivals can match.

This article is for informational purposes only and does not constitute investment advice.