SpaceX Short Sellers Retreat as Stock Rebounds 38% From Low

Shares jumped 8% Wednesday to around $144, about 7% above the $135 IPO price and roughly 38% above the Aug. 3 low. The stock initially tumbled after SpaceX disclosed in its first earnings report last week that capital expenditures were more than double its revenue, a signal of the enormous spending needed to fund its rocket and satellite ambitions.

That sell-off drew a wave of short sellers, pushing short interest to unusually high levels relative to the stock's limited public float. Short selling involves borrowing shares and selling them, hoping to buy them back later at a lower price.

The math changed last Thursday, when just over 911 million SpaceX shares became eligible for trading after an initial lockup period expired. The newly unlocked tranche represented roughly 7% of shares outstanding and exceeded the 639 million shares sold in the IPO.

The larger float mechanically reduced short interest as a percentage of tradable shares. Short covering also contributed to the decline, S3 said. Investors who had wagered against SpaceX bought back stock to exit.

More supply is coming. On Aug. 20, another 319 million shares could unlock, followed by roughly 700 million in September and close to that in October, according to the prospectus. The additional shares could create fresh volatility as employees and early investors gain more chances to sell. At the same time, a larger float would make it easier for investors to establish new short positions if bearish sentiment returns.