SpaceX (SPCX) shares remain in focus after Elon Musk issued a pointed warning to those betting against his space infrastructure and artificial intelligence (AI) company.
In his latest post on X, the billionaire wrote: “Survival probability of firms who maintain significant short position in SPCX over time is very low.”
Musk’s comment arrives at a time when SpaceX stock has fallen out of favor with investors mostly because of valuation concerns. At writing, it’s down 40% versus its post-IPO high of over $200.
Short interest has risen sharply in SpaceX stock
Bearish sentiment surrounding the space and AI conglomerate has intensified rather quickly.
Short sellers have built a massive $25 billion wager against SpaceX – with “short interest” soaring from 40 million shares a month ago to 206 million shares, representing roughly 32% of its public float.
Experts attribute this rapid acceleration in short positions to traders pricing in negative catalysts – including the firm’s high valuation multiple (over 80x sales).
Additionally, short sellers are betting that multi-billion-dollar annual net losses, fuelled by heavy AI compute expenditures, will continue to pressure SPCX shares in the near-term.
A short squeeze isn’t out of the question
Despite rising bets against SpaceX shares, bulls contend that the current setup leaves short sellers vulnerable to a classic short squeeze.
With nearly a third of the active float sold short, any positive catalyst could trigger a violent buying scramble as bears rush to cover their positions.
In the near-term, this could kick off as soon as next month as SpaceX reports its very first quarterly earnings as a public company on August 4th.
If Starlink subscriber momentum, space launch revenues, or margin figures top expectations, the resulting rally could force margin calls and accelerate upward momentum.
A major risk tied to buying SPCX shares
Investors should note, however, that the potential for a squeeze is complicated by upcoming supply changes.
Following the earnings print, the initial post-IPO lock-up restrictions will begin to expire, releasing millions of insider and employee shares into the public float.
This incoming surge of liquidity will expand the tradable supply, making shares significantly easier for bears to borrow and cover over time.
In short, while long-term investors align with Elon Musk’s vision of dominating space logistics and next-gen connectivity, near-term traders remain sharply divided until the August numbers provide concrete clarity.
How Wall Street recommends playing SpaceX
Despite recent underperformance, SPCX stock hasn’t fallen entirely out of favour with high-profile names.
For example, Cathie Wood – the chief executive of Ark Invest – continues to invest in SpaceX on the pullback, believing it could eventually become the most important company in history.
And Wall Street analysts seem to agree with her optimism. The consensus rating on SPCX sits at Moderate Buy currently, with price targets going as high as $800, signaling a more than 6x potential over time.
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