SpaceX stock rebounds 40%, short interest drops from 34% to 11%

Short sellers betting against SpaceX are rapidly retreating as the stock rebounds sharply from its post-IPO slump. Short interest in SpaceX has fallen to about 11% of the company's publicly traded shares as of Wednesday, a significant drop from a peak of 34% just a week earlier, according to data from S3 Partners. This shift comes as the stock begins to recover, buoyed by a combination of bearish investors closing out their positions and an expanded pool of tradable shares following the expiration of a major lockup period.

The recent rebound follows a tumultuous period for SpaceX shares after the company's first earnings report revealed that its capital expenditures were more than double its revenue. This disclosure raised concerns among investors about the high spending necessary to support SpaceX's ambitious goals, leading to a wave of short selling that pushed short interest to unusually high levels relative to the company's limited public float. However, the landscape changed dramatically last Thursday when over 911 million shares became available for trading, representing about 7% of the company's total shares outstanding. This influx of shares has mechanically reduced the percentage of short interest.

The stock's recent surge, with an 11% jump on Wednesday to approximately $148, has lifted it 10% above its initial public offering price of $135 and 41% above its low of $105 recorded on August 3. Analysts suggest that short covering, where investors buy back shares to close out their positions, has added momentum to the stock's rise. "Shorts that wanted to short are out of bullets," said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, highlighting the limited options available for those betting against the stock.

Looking ahead, more volatility could be on the horizon as another 319 million shares will unlock on August 20, followed by approximately 700 million shares in both September and October, according to SpaceX's prospectus. While the increased supply may present new selling opportunities for employees and early investors, it could also provide a more substantial float that allows for new short positions if bearish sentiment resurfaces. The dynamic around SpaceX shares remains fluid, and how investors react to upcoming unlocks will be crucial in shaping the stock's trajectory.