10% of Shares Lent in 10 Days! Short Sellers Attack SpaceX

Only one month after completing the largest IPO in history, SpaceX has faced a sharp reversal in market confidence. The share price has dropped below its IPO price, short sellers have profited by about $4 billion, bond yields are approaching junk levels, and investors’ enthusiasm for this Elon Musk-led rocket and AI company is rapidly fading.

This week, SpaceX stock fell below its IPO price of $135 for the first time, down approximately 40% from its mid-June intraday high of $225. On Friday, the stock dropped more than 5% again, closing at a record low of $123.99. At the same time, the company’s bond yields have risen sharply, the credit default swap market has expanded, and the repricing of its risks has spread to both equities and bonds.

Shorting pressure is accelerating. According to data from S3 Partners, over the past month, short sellers betting on a decline in SpaceX’s share price have racked up about $4 billion in unrealized gains. Currently, about 30% of the 640 million tradable SpaceX shares have been borrowed for short selling, a proportion that has increased by 10 percentage points in the past 10 days.

Dec Mullarkey, Managing Director at SLC Management, stated, "Investor enthusiasm for SpaceX appears to have cooled," and the company’s stocks and bonds are "pricing in more risk."

Upcoming Lockup Expiration Puts Pressure on the Market

One of the core drivers of this round of selling is the imminent large-scale share unlock. According to market sources, about 900 million SpaceX shares may enter circulation as early as next month, as some pre-IPO investors’ lockup periods expire, bringing a massive influx of supply to the market.

The Chief Investment Officer of a small North American hedge fund commented, "As more stocks come to market in August, even if SpaceX announced it conquered the moon and found gold inside, there would still not be enough funds in the market to absorb these shares." Reportedly, this fund made $20 million from shorting SpaceX in early July.

This expectation is prompting some investors to exit early, rather than wait for the liquidity shock after the shares are unlocked.

Bond Market Weakens in Tandem, CDS Market Heats Up Rapidly

SpaceX’s bond market is also under pressure. At the end of June, the company completed a large-scale $25 billion bond issuance, shortly after receiving an investment-grade credit rating from major rating agencies. However, its bond yields are now close to the levels for junk-rated borrowers.

One 30-year SpaceX bond has seen its yield rise from 6.7% at issuance to 7.4%, with the price dropping to about 91% of face value. At the same time, the SpaceX credit default swap market emerged at the end of June, with the current CDS spread at 158 basis points, meaning the annual cost of buying five-year default insurance on $10 million of bonds is roughly $158,000, significantly higher than the $110,000 at the end of June.

SpaceX’s decline is not an isolated incident, but rather comes amid broad pressure on high-valuation tech stocks. As the week closed, U.S. semiconductor stocks recorded their worst single-week performance since the market turmoil on "Liberation Day" last year. The collective correction in the core AI sector has further intensified the selling pressure on SpaceX.