The SpaceX stock shows a significant loss after a Starship rocket’s failed launch.
(Image: Rawpixel.com / Shutterstock.com)
Following the failed launch of the Starship rocket, shares dropped below $135. According to Ortex, bears are holding on to their short bets despite high risks.
The IPO of SpaceX was depicted as a major media event. However, those who bet against Elon Musk’s space venture in early July are now reaping significant profits.
According to a Reuters report, short sellers have pocketed an estimated profit of $8.7 billion. This figure stems from analysis provided by Ortex Technologies.
The euphoria initially propelled SpaceX’s stock up to $225.64. However, the decline was swift: within weeks, the stock fell below the IPO price of $135—a drop costing the company more than a trillion dollars in market value, according to Bloomberg.
On Friday, the stock closed at $123.99, down 5.4%. Consequently, the market capitalization shrank to $1.62 trillion, down from $2.64 trillion on the third trading day in mid-June.
The Billion-Dollar Triumph of Short Sellers
In short selling, investors borrow shares to sell with the expectation of buying them back at a lower price later. This strategy can yield substantial profits but also carries the risk of losses if prices rise instead of fall.
SpaceX has become particularly interesting for speculators, as Ortex data shows that nearly half of the freely traded SpaceX stocks, approximately 49% of the float, are currently borrowed.
“SpaceX has been a rollercoaster for short sellers, ultimately tipping in their favor,” stated Ortex co-founder Peter Hillerberg to Reuters. “Instead of taking profits, the bears continued to buy more during the entire downward trend.”
According to Ortex, each dollar movement in the stock impacts over $300 million on the short side—a leverage effect that works in both directions.
Starship Launch Failure as a Catalyst
The immediate trigger for the recent stock drop was a failed Starship rocket launch. Several Raptor engines did not ignite, leading Musk to announce a replacement of two engines on X.
Joe Gilbert, portfolio manager at Integrity Asset Management, commented to Bloomberg that investors are reducing risk in light of diminishing AI euphoria and high valuations.
SpaceX has reportedly invested over $15 billion in Starship, which aims to deliver Starlink satellites more economically and facilitate orbital data centers. Meanwhile, SpaceX bonds are sliding toward junk status.
A Risky Game in Both Directions
Despite the sell-off, more than 80% of analysts surveyed by Bloomberg classify the stock as a buy. Raymond James analyst Brian Gesuale boasts the most bullish target on Wall Street, setting a price target of $800.
However, Mark Malek from Siebert Financial warns that expiring lock-up periods could create additional selling pressure—investors waiting on the sidelines might speculate on lower entry points.
