SpaceX Short Interest Hits 34% Ahead of Earnings, Prompting Musk Warning

CEO Elon Musk issued a pointed warning to short sellers on social media platform X, as new data reveals a massive build-up of bearish bets against SpaceX (NASDAQ: SPCX) just hours before the company's highly anticipated first earnings report as a public entity.

In a post on X, Musk stated, "I try to warn them, but they just double down …," echoing his historically contentious and often successful battles with investors betting against his companies. The statement comes as Wall Street braces for significant volatility surrounding the aerospace firm's quarterly results, scheduled for release after the market closes on August 4.

Short Interest Nears Critical Levels

The catalyst for the market tension is recent data from S3 Partners, which highlights an exceptionally crowded short trade in SpaceX shares since its June initial public offering. The metrics suggest a precarious technical setup for bears, raising the possibility of a significant short squeeze.

Key figures include:

• Short Interest: Approximately 34% of the company's publicly traded float is being shorted, a figure considered extremely high by market standards.
• Shares on Loan: 95% of the available supply of borrowable shares has been loaned out to short sellers, indicating near-total utilization.
• Borrowing Costs: The scarcity of available shares has caused the cost to borrow SPCX stock to rise sharply, increasing the financial pressure on short positions.

This concentration of bearish bets means that any positive news from the earnings report could trigger a rapid surge in the stock price, as short sellers would be forced to buy back shares to cover their positions.

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The Bear Case Against SpaceX

Despite the risks, short sellers have been emboldened by several factors. Market analysts point to the company's massive ~$1.6 trillion valuation, which they argue leaves little room for error, especially when compared to its estimated $19 billion in trailing-twelve-month revenue.

Furthermore, concerns persist about near-term profitability due to heavy capital expenditures on ambitious projects like the Starship rocket. The impending expiration of post-IPO lock-up periods could also introduce a new wave of selling pressure as insiders become eligible to sell their shares for the first time.

A Familiar Showdown

The current situation sets the stage for a classic confrontation between a high-conviction short-seller camp and a CEO known for leveraging his company's performance to punish detractors. With nearly all borrowable shares in play, the company's first public earnings report will serve as a powerful catalyst, likely leading to a decisive and volatile outcome for one side of the trade.