Short sellers hold $5B in paper gains after SpaceX stock shed $1T from peak, S3 data shows. Short interest hit $25B notional with 30% of float sold short. Lock-up expirations loom.
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Short sellers in SpaceX stock have booked about $5 billion in paper profits as shares slid sharply from their post-IPO peak, according to S3 Partners, a financial data provider.
The firm estimated roughly 192 million shares, or 30% of the float, are sold short. The notional value of short interest rose to $25 billion from $4.5 billion on June 15, said Matthew Unterman, a managing director at S3.
Peter Hillerberg of analytics platform Ortex said the short sellers' ride has been extreme. Early this June, they sat on a paper loss of $677 million. By Thursday's close, that had flipped to an unrealized profit of $8.7 billion. "SpaceX has been a rollercoaster for the short sellers, and it has ended up firmly in their favor," Hillerberg said.
Shares fell 5.4% on Friday to $123.99, wiping out more than $1 trillion in market value from an all-time high set on June 16, the stock's third day of trading. At the closing price, SpaceX had a market capitalization of $1.63 trillion, down from $2.64 trillion at the peak. The stock is now below the $135 initial public offering price.
Friday's decline came after the company aborted a Starship launch due to an engine issue.
Despite the selloff, most Wall Street analysts remain bullish. More than 80% of those tracked by Bloomberg rate the stock a buy, with an average price target of $235.34, implying roughly 90% upside from current levels.
A key risk for the stock is the extended lock-up period for insiders. Shares are set to be released into the market periodically over the coming months. "If we factor in the lock-ups expiring in the future, many investors have probably re-thought their initial theses, and prospective ones who have been watching from the sidelines are waiting for lower entry points, which have a good chance of emerging as its valuation gets rightsized," said Mark Malek, chief investment officer at Siebert Financial.
SpaceX joined the Nasdaq 100 Index earlier this month.
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