SpaceX (SPCX.US) was hunted down and fought back! The stock price rebounded from a lower point by nearly 40%, and short positions plummeted to 11%

The Zhitong Finance App learned that at a time when the SpaceX (SPCX.US) stock price recently rebounded sharply from the slump after the IPO, bears are rapidly leaving. As of Wednesday, SpaceX's short positions had fallen to around 11% of its publicly traded shares, a sharp drop from last week's peak of 34%, according to S3 Partners. This decline reflects the combined effects of closing short positions and a significant increase in tradable shares of the stock after the first large-scale sales restriction period expired. Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, said, “Those who want to go short don't have bullets anymore. After all, the amount you can invest in a trade is limited.”

As the SpaceX bears retreated, the stock price also rebounded sharply from the sell-off after the earnings report was announced, and the bears' recovery may have further boosted this rise. For popular stocks with a high shorting ratio, once the stock price does not fall as expected by the bears, but instead rises rapidly, the bears are forced to make up may further push up the stock price, thus forming positive feedback of “rise — make up — rise further.” On Wednesday, SpaceX's stock price closed up 9.65% to about $146, making its stock price about 8% higher than the $135 IPO price, and about 39% higher than the August 3 low.

Since its listing, SpaceX's stock price has experienced a roller coaster ride. Shortly after the company's IPO, its stock price quickly climbed to an all-time high, and since then the cumulative market value of more than 1 trillion US dollars has evaporated. On Wednesday, after SpaceX released its first public performance report since listing, the stock price fell 14% in a single day. One of the main reasons was that the company's spending on the artificial intelligence (AI) business was higher than market expectations. However, after just two trading days, market sentiment clearly reversed. SpaceX's stock price rose by about 16% last Friday, and the two-day cumulative increase reached about 23%, bringing the stock price back close to the $135 IPO price.

What is particularly noteworthy about SpaceX's rebound is that it occurred after the market's most feared restricted stock ban was lifted, and this is one of the reasons bears are hunting SpaceX in a big way. Last Thursday, about 9115 million shares of previously restricted shares entered the market, drastically increasing the number of shares that SpaceX can trade from 639 million to 1.55 billion shares, and the size of tradable shares more than doubled. According to the market's previous concerns, a large number of new stocks may create huge potential selling pressure. However, judging from actual trends, the lifting of the ban has instead become the starting point for a rebound in stock prices.

After the scale of tradable shares increased, the share of short positions in tradable stocks naturally declined. However, S3 Partners said that short compensation also contributed to the decline in short positions, as investors who previously bet on falling SpaceX stock prices bought back shares to clear their short positions.

There are more shares SpaceX about to unlock. According to the prospectus, another 319 million shares may be unlocked on August 20, followed by about 700 million shares in September and shares close to this size in October. The addition of shares may bring new volatility as employees and early stage investors will have more opportunities to sell shares. At the same time, larger tradable shares will also make it easier for investors to establish new short positions when bearish sentiment heats up again.

In addition to banning the “tsunami,” the reason SpaceX is being targeted by bears is an AI “money-burning black hole.” For every $1 in revenue generated by SpaceX's AI business, approximately $6.18 in capital is required. The short gamble is that this money-burning model is unsustainable. Although the AI business handed over $2.56 billion in revenue in the second quarter (up 247% year over year) and adjusted profit before interest, tax, depreciation and amortization (EBITDA) was corrected to US$1,146 billion for the first time, GAAP operating losses still reached US$1.26 billion, mainly due to depreciation expenses of US$1,885 million. Furthermore, bears believe that the market's pursuit of Musk's personal aura and grand narrative has far exceeded the company's fundamental support.

Elon Musk issued a series of warnings last month about the bears' blockade. He said, “Agencies that have been shorting SpaceX for a long time have a very low chance of survival.” “There's no question that SpaceX's value will surpass the entire planet.”

The long and short rivalry surrounding SpaceX is essentially a dispute over “whether a company that has not yet made a profit can support a trillion dollar valuation.” And the SpaceX story was never about “now,” but about “what if.” If Starships are completely reused, if Starlink becomes the fourth largest operator, and if space data centers become a reality — behind every “if”, there is a raised chip.

The rapid rebound in stock prices doesn't mean that market concerns about SpaceX's overvaluation have disappeared. As the supply shock brought about by the lifting of the ban gradually dissipates, investors still need to face a core question — whether the market is willing to continue to pay extremely high valuations until SpaceX's AI, satellite internet, and space businesses fully realize their potential.

SpaceX is currently betting on multiple growth directions such as rocket launches, satellite internet, and AI infrastructure at the same time. Whether SpaceX's future stock price can continue to break through upward depends not only on the growth of existing businesses such as Starlink, but also on whether the market can see actual returns from AI infrastructure investment.

Matt Maley, chief market strategist at Miller Tabak, pointed out that after the trading impact caused by the lifting of the restricted share ban gradually subsides, investors will ultimately still need to decide whether they want to buy a company at such a high price that may take years to fully realize its potential.

The lifting of the ban, which could have triggered a sell-off, has been quickly digested by the market, and short compensation and bullish options trading have further amplified upward momentum. However, when short-term trading factors gradually recede, the market will eventually return to a basic question — whether SpaceX can use business growth in the next few years to fulfill the current extremely high market expectations. If the answer is yes, $135 may only be the starting point for the next round of gains; if the AI and aerospace businesses are cashing out less than expected, then the recent surge driven by short compensation and option funding may also become a new source of volatility.