Short sellers betting against SpaceX are rapidly retreating from the trade, just as the newly public stock rebounds from its post-IPO slump.
Short interest in SpaceX fell to about 11% of the company’s publicly traded shares Wednesday, down sharply from a peak of 34% last week, according to S3 Partners
The decline reflects a combination of bearish investors closing out positions and a significant expansion of the stock’s tradable float following the first major lockup expiration. “Shorts that wanted to short are out of bullets,” said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners. “Only so much money you can put into a trade.” The exodus came as SpaceX shares staged a sharp rebound from their post-earnings sell-off, with short covering potentially adding fuel to the advance. Investors closing bearish positions must buy back shares, which can amplify upward moves when a stock is already rallying. Shares jumped 8% Wednesday to around $144, lifting the stock about 7% above its $135 IPO price and roughly 38% above its Aug. 3 low.
SpaceX has endured a roller-coaster ride since going public. The stock initially tumbled after the rocket and satellite company disclosed in its first earnings report last week that capital expenditures were more than twice its revenue, fueling concerns about the enormous spending required to fund its ambitions. The sell-off attracted a wave of short sellers, pushing short interest to unusually elevated levels relative to the stock’s limited public float.