SpaceX shares fell below their initial public offering (IPO) price of $135 for the first time on Wednesday, briefly dropping to $133.5 before recovering to close at $135.27. The decline marks a significant shift from the stock's post-IPO high of $225.64, as short sellers have capitalized on the volatility, amassing an estimated $8.7 billion in paper profits since the IPO last month.
Short Sellers Increase Bets
Short interest in SpaceX has surged, with nearly 49% of the company's tradable shares now out on loan, according to Ortex Technologies. This represents a sharp increase from earlier estimates, with about 29% of the float sold short as of recent data. Analysts suggest that most of these borrowed shares are being used for short selling, betting against the company's stock.
Market Reaction and Volatility
The stock's decline reflects broader investor concerns, including SpaceX's heavy spending on AI initiatives and its lofty valuation. The company's market cap briefly exceeded $2 trillion after its IPO, making it one of the world's most valuable public companies. However, the stock's recent performance has raised questions about its sustainability, particularly as it trades near its IPO price.
Analyst Perspectives
While some analysts remain bullish, with Raymond James setting an $800 price target—implying a 491% upside—others caution about the risks. The selloff has been attributed to profit-taking, broader tech-sector weakness, and skepticism over SpaceX's valuation. The company's heavy short interest could further amplify volatility, with every dollar move in the stock worth over $300 million to short sellers.
Company Background
SpaceX, led by CEO Elon Musk, is a leader in launch services and satellite-based broadband through its Starlink service. The company has been expanding into AI, including plans for orbiting satellite data centers. Its IPO raised $85.7 billion, making it the largest in history. Despite the recent stock decline, SpaceX retains significant operations and continues to innovate in both space and AI technologies.