Elon Musk’s companies are targets of short sellers
The firm estimated that 192 million SpaceX shares — around 30% of the total float — have been sold short.
Matthew Unterman, a managing director at S3, told Business Insider that bearish investors were doubling down on their short bets against SpaceX, with the notional value of short interest in the company rising to $25 billion from $4.5 billion on June 15.
In fact, Elon Musk’s companies have often been targets of short bets.
Peter Hillerberg, the cofounder of financial analytics platform Ortex, told Business Insider that SpaceX short sellers had been on a wild ride since the June 12 IPO. According to the firm’s estimates, they went from sitting on a paper loss of $677 million in early June to an unrealised profit of $8.7 billion by Thursday’s market close. Hillerberg notes that volatility is likely to continue.
“SpaceX has been a rollercoaster for the short sellers, and it has ended up firmly in their favor,” he said.
SpaceX erases more than $1 trillion in market value
SpaceX shares tumbled on Friday, erasing more than $1 trillion in market value from the rocket and artificial intelligence giant’s all-time high.
The stock fell 5.4% to $123.99 per share, giving the company a market value of $1.63 trillion. The value stood at $2.64 trillion at the close on June 16, its third day of trading.
Elon Musk’s company — officially known as Space Exploration Technologies Corp. — initially rallied after the largest initial public offering in history, but has lost ground since and is trading below the $135 IPO price. Friday’s decline comes after the company aborted a launch of its Starship rocket due to an engine issue.
Wall Street remains largely bullish on SpaceX despite selloff
Despite the recent selloff, Wall Street remains largely bullish, with more than 80% of Bloomberg-tracked analysts rating the stock a buy equivalent. The average price target of $235.34 suggests about 90% upside from current levels.
The company, which joined the Nasdaq 100 Index earlier this month, is facing an extended lock-up for insiders, with shares periodically released into the market over the coming months.
“If we factor in the lock-ups expiring in the future, many investors have probably re-thought their initial theses, and prospective ones who have been watching from the sidelines are waiting for lower entry points, which have a good chance of emerging as its valuation gets rightsized,” said Mark Malek, chief investment officer at Siebert Financial.
