Short sellers targeting SpaceX shares have amassed an estimated $8.7 billion in paper profits since the company's initial public offering (IPO) last month, as the stock price slipped below its IPO price of $135, according to data and analytics firm Ortex Technologies.

Following a post-IPO peak of $225.64, SpaceX shares have been volatile, with brief recoveries followed by declines. On Wednesday, the stock fell below its IPO price for the first time before closing just above that level. By Thursday, shares rose about 1% to $136.28.

Short sellers, who borrow shares to sell them and later repurchase at lower prices for profit, have increased their bearish bets throughout the decline. "Rather than take profits, the bears kept adding the whole way down," noted Ortex co-founder Peter Hillerberg, who described the situation as a "rollercoaster for the short sellers" that ultimately favored them.

Approximately 49% of SpaceX's tradable shares, nearly half of the free float, are currently out on loan, highlighting the significant short interest. Ortex estimates that each dollar movement in SpaceX's share price corresponds to more than $300 million impacting the short side, potentially adding further volatility.

Despite the high valuation attracting short sellers skeptical of the price, strong retail and institutional demand, along with CEO Elon Musk's history of confronting short sellers publicly, make bearish positions risky.

Sources

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