Short sellers pile into SpaceX despite heavy paper losses

Ortex data indicates that short interest has surged to 196 million shares, representing 31% of the free float, a sharp increase from the 13% recorded just one week ago. While the stock’s initial decline following its IPO emboldened skeptics, a subsequent rebound erased roughly $2.5 billion in paper gains that these investors held when the price bottomed near $153 last week.

Peter Hillerberg, co-founder of Ortex, described the rapid accumulation of short positions as extraordinary for a company that has been public for less than a month. With SpaceX currently holding a valuation exceeding $2 trillion, many investors remain skeptical of its price tag. However, the presence of strong retail and institutional interest, combined with Elon Musk’s history of public confrontations with short sellers, makes these wagers a high-stakes gamble.

Although the cost to borrow shares remains relatively inexpensive at 1%, the sheer volume of short interest creates a volatile landscape. Every $1 swing in the share price translates to roughly $200 million in gains or losses for the short side. Market analysts suggest that if the stock continues to climb, the resulting short covering could trigger a squeeze, potentially driving share prices even higher as bearish investors scramble to exit their positions.