SpaceX Short Bets Reach $23.6 Billion to Surpass Tesla Ahead of First Wave of Share Unlocking and Earnings

TradingKey - SpaceX is about to face an earnings release and a wave of lock-up expirations, with its short interest exceeding Tesla's, but investors should be wary of short squeeze risks.

On August 4, Eastern Time, impacted by its upcoming inaugural earnings report, SpaceX ( SPCX) stock experienced intense volatility, continuing to rise over 2% today to temporarily trade at $117.12. Yesterday, SpaceX plummeted rapidly after the opening bell, pulling back during session trading to approach the key $100 mark, before steadily climbing to close up more than 5%.

SpaceX stock chart, Source: TradingView

Currently, SpaceX is facing its most critical test since going public. Data from financial analytics firm S3 Partners shows that short sellers are heavily betting against the space and AI giant, with short interest surging to nearly $23.6 billion, accounting for over 32% of its public float. In terms of nominal short interest, it has officially surpassed Tesla ( TSLA ), becoming one of the largest short targets in the U.S. stock market.

The core catalysts behind the market's aggressive shorting of SpaceX are the wave of lock-up expirations and the upcoming earnings report. After today's closing bell, SpaceX will release its first quarterly earnings report since its IPO, with Wall Street closely scrutinizing its HBM, Starlink operations, and AI capital expenditures (CapEx). If SpaceX's results fail to meet high expectations, it could easily trigger a correction in its premium valuation.

On the second full trading day following the earnings announcement, SpaceX will face its first round of restricted stock lock-up expirations, which is expected to release approximately 900 million restricted shares into market circulation. Because SpaceX's public float was extremely low at its IPO, with a free float of only about 4% to 5% (roughly 555 million shares), the first wave of lock-up expirations will dramatically increase the supply of shares in the market, raising investor concerns that early employees and institutional shareholders might take profits, thereby exerting heavy selling pressure on the stock.

The underlying reason why short sellers are emboldened to heavily short SpaceX is that the market perceives its valuation to be too high. SpaceX's valuation once reached as high as $1 trillion, with its price-to-sales ratio exceeding 80 times—far higher than those of traditional aerospace and defense giants, which typically range between 1.5 and 3 times. Furthermore, although Starlink generates stable cash flow, the AI infrastructure and orbital data centers integrated with xAI require massive capital, leading to wider operating losses and prompting some value investors to question its short-term profitability.

In response to the market's short-selling activity, SpaceX CEO Elon Musk previously issued a stern warning to short sellers on X, stating that 'the probability of survival is extremely low for institutions that short SpaceX heavily on a long-term basis.' Whether Musk will urge shareholders whose lock-ups expire to limit selling or continue holding firmly remains a possibility that cannot be ruled out. If this occurs, it would inevitably trigger a short squeeze. Of course, if the earnings data beats expectations, it could also trigger a massive upward short squeeze, meaning that a plunge in SpaceX's stock price this week is by no means guaranteed.