Wall Street bears are rushing into the most closely watched public company under Elon Musk's umbrella at an unprecedented pace, just ahead of SpaceX's first quarterly earnings report as a public entity and the largest lock-up expiration in its history.
According to the latest data from S3 Partners, as of July 29, short interest in SpaceX has surged to 219.3 million shares, representing approximately 34% of publicly traded shares, with a notional value of $24.6 billion. This scale has surpassed the short positions on Tesla, making SpaceX one of the most heavily shorted large-cap companies in the U.S. market. Short interest has exploded nearly tenfold from 23.3 million shares at the IPO, reflecting a triple-layer gamble centered on earnings data, the lock-up expiration flood, and valuation bubbles.
S3 research director Sam Pierson stated bluntly: "The biggest bet right now is on the lock-up expiration -- the market believes there's nothing in the earnings report that can offset the impact of a massive influx of unlocked shares."
The Core Logic of Short Sellers: Betting the Lock-Up 'Flood' Will Collapse the Valuation
The core logic behind such aggressive short positioning in SpaceX is simple and brutal -- they are betting on the supply shock coming next week. SpaceX will release its first quarterly earnings as a listed company after the U.S. market closes on Tuesday, August 4. Just two days later, on August 6, according to the company's phased lock-up schedule, as many as 911.5 million shares will become eligible for trading, potentially flooding the public market.
What does this lock-up scale mean? SpaceX currently has only about 640 million shares available for trading, roughly 5% of its total shares. The first lock-up expiry will more than double the tradable share count to about 12%. But this is just the beginning -- the prospectus documents show that the total number of tradable shares could increase from the current 639 million to 5.33 billion by year-end, a more than sevenfold increase.
S3 Partners research director Sam Pierson noted: "The biggest bet right now is on the lock-up expiration -- practically, there won't be anything in the earnings report that can offset the impact of a massive influx of unlocked shares." More concerning is that the 911.5 million shares unlocking on August 6 are just the first tranche. Additional 7% of shares will unlock on subsequent dates like August 20 and September 9. An additional 455.8 million shares have conditional early unlocking provisions, but the previously set price threshold (closing above $175.50 for 5 out of 10 consecutive trading days) can no longer be triggered due to the stock's sharp decline.
Morgan Stanley warned in its latest report that SpaceX is approaching its "most dangerous moment," with approximately $100 billion worth of stock potentially hitting the market in the coming weeks. The cost of borrowing SpaceX shares for shorting has risen due to crowded shorts, but Pierson expects borrowing difficulty to ease after the lock-up expiration.
Morgan Stanley has labeled this earnings report as the "most dangerous moment" since SpaceX went public. The bank estimates SpaceX will report second-quarter revenue of approximately $6.75 billion, with an adjusted loss per share of $0.35. Starlink's global consumer subscriber base is expected to reach 12 million, with an ARPU of about $65.5. Morgan Stanley noted that what truly sways market sentiment may not be the financial numbers themselves, but management's commentary on the future direction of AI, Starlink, and Starship. Investors are particularly focused on the Starship development timeline, the speed of AI computing deployment, and the overall progress of Grok and the Cursor model. However, since the Cursor acquisition is expected to close later this quarter, the Q2 earnings will not disclose the transaction's specific financial contribution.
As shorts mass, the cost of borrowing SpaceX shares has increased. However, S3's Pierson pointed out: "For shorts wanting to maintain their positions into next week, there will be some resistance, but after that, borrowing costs are likely to revert to easy borrowing levels."
Musk's Wealth 'Halved': Over $600 Billion Evaporated in a Month
Meanwhile, SpaceX's stock price continues to face pressure. On Friday (July 31), the stock fell 3.4% to close at $108.37, hitting an intraday record low of $107.01. This price is down about 20% from the June 12 IPO price of $135 and a staggering 52% plunge from its post-IPO high of $225.64. In July alone, SpaceX accumulated a decline of 36.57%.
The simultaneous collapse of both SpaceX and Tesla is having a devastating impact on Elon Musk's personal wealth. According to the Bloomberg Billionaires Index, Musk's net worth has fallen to approximately $684 billion. Just over a month ago, on June 16, his wealth peaked at around $1.33 trillion -- meaning over $600 billion in wealth has evaporated in just a month and a half. This contraction alone exceeds the total net worth of any other billionaire on the Bloomberg global 500 list, aside from Musk himself.
The synchronized plunge of his two core assets is the direct cause of the wealth erosion. SpaceX's stock has plummeted 46% since its closing high of $201.80 on June 16. Tesla's stock has fallen 17% since its second-quarter earnings release on July 22. Tesla's earnings report showed its first quarterly free cash flow negative in two years, despite growth in both vehicle deliveries and revenue. Musk holds approximately $129 billion worth of Tesla stock and over $550 billion worth of SpaceX stock. The valuation changes of these two holdings are directly determining the world's richest person's wealth landscape.
Three Key Long-Term Variables: Lock-Up Expiry, S&P 500 Inclusion, and Tesla Merger
S3 Partners' Pierson pointed out three key drivers to watch over the next year. The first is the lock-up process. This is the most urgent short-term risk. After the initial 911.5 million shares unlock, multiple subsequent tranches will continue to exert supply pressure on the stock price. The second is S&P 500 index inclusion. According to relevant rules, newly listed stocks must meet "seasoning rules" (typically requiring being public for 6 to 12 months with consecutive profitability). SpaceX would not be eligible for S&P 500 inclusion until at least mid-2027 at the earliest. However, the market has already started pricing this in advance. The third is a potential Tesla merger. Pierson noted that if SpaceX and Tesla execute some form of business combination, it would "accelerate this inclusion process." While this idea remains speculative for now, it is not entirely inconceivable given Musk's control over both companies.
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