To The Moon

Six weeks ago, investors were desperate to get into $SpaceX(SPCX)$ .

Today, many seem just as eager to bet against it.

The stock was priced at $135 in its IPO, surged to $225.64, and finished last week at $115.07—nearly 49% below its peak. Along the way, an estimated $15.5 billion in paper profits accumulated on short positions.

The mood has completely flipped.

And that's exactly why this story is becoming more interesting.

The first lesson was about hype. The second is about positioning.

Before the IPO, the biggest risk wasn't the business itself—it was investor behavior.

Too many buyers chased too few shares, and scarcity helped fuel an explosive rally.

When the stock later fell back to its IPO price, some investors immediately assumed $135 had become a bargain.

But an IPO price isn't an intrinsic value. It's simply the price agreed upon between the company and investors during the offering process.

That distinction mattered then.

It still matters now.

The valuation debate hasn't disappeared...

Even after the sharp selloff, SpaceX still carries a market value of roughly $1.5 trillion.

That's above the approximately $1.3 trillion equity valuation estimated before the IPO by NYU valuation professor Aswath Damodaran.

Much of the disagreement centers on the company's AI business, where long-term assumptions are far more difficult to estimate than its launch services or Starlink business.

In other words, the valuation argument hasn't gone away.

The bears still have legitimate reasons for caution.

...but the short trade isn't as comfortable as it was

Here's what has changed.

Earlier last week, roughly 360 million shares—about 56% of the public float—had already been borrowed by short sellers.

Instead of locking in profits after the nearly 50% decline, many continued increasing their positions.

That doesn't automatically mean they're wrong.

But it does mean the trade has become increasingly crowded.

When so much of the available float has already been sold short, expectations no longer need to improve dramatically to move the stock.

Sometimes all it takes is news that is simply less negative than expected.

That's how short squeezes begin.

Ironically, today's psychology mirrors what happened during the IPO.

Back then, investors feared missing the upside.

Now many fear missing the downside.

Neither emotion is a reliable investment strategy.

Friday's Starship flight changes the conversation—but not the valuation

After Friday's market close, SpaceX completed the 13th Starship test flight.

The mission successfully deployed 20 advanced Starlink satellites, established communication with them, completed its strongest atmospheric reentry to date, and achieved a controlled splashdown while the spacecraft remained intact.

The booster recovery wasn't perfect, as insufficient engine relights prevented a successful return.

Was it a flawless mission?

No.

Does one successful test suddenly justify a $1.5 trillion valuation?

Also no.

But it does reduce some of the operational uncertainty surrounding Starship's development.

That matters because Starship is expected to play an important role in deploying larger next-generation Starlink satellites and expanding network capacity over time.

For long-term investors, it's another piece of evidence.

For heavily shorted traders, it removes one potential negative heading into the new week.

The rocket isn't the biggest catalyst. Earnings are.

The real test arrives on August 4, when SpaceX reports its first quarterly results as a public company.

For the first time, investors should gain a clearer view into several critical areas:

• Starlink's growth trajectory

• Operating margins

• Cash generation

• Capital spending

• The scale of AI-related investment

Those numbers will likely have a much larger impact on valuation than a single test flight.

Strong cash generation and healthy Starlink economics would make the current valuation easier to defend.

Weak cash flow or rapidly rising AI spending without corresponding business performance would strengthen the bearish case.

The answer simply isn't known yet.

Then comes another challenge: the unlock

Even if earnings are well received, another event quickly follows.

On the second trading day after earnings, employees and early investors may become eligible to sell approximately 911.5 million shares.

That is a meaningful increase in potential supply.

During the IPO, less than 5% of the company's shares were freely tradable.

The lock-up expiration changes that dynamic considerably.

It's also important to remember that insider selling isn't automatically bearish.

Employees may sell for entirely personal reasons—buying a home, paying taxes, or diversifying their wealth.

The market, however, still has to absorb that additional supply.

Trading and investing are not the same thing

This is where many investors blur two very different ideas.

A short-term trade is about catalysts and positioning.

A long-term investment is about business quality.

Those don't always move together.

A positive earnings report could trigger a relief rally, while insider selling weeks later could create fresh volatility.

Likewise, the stock could decline further because of additional supply even if Starlink's underlying business continues improving.

Both outcomes can be true at the same time.

Bottom line

Six weeks ago, the biggest risk was believing SpaceX could only go higher.

Today, the opposite mindset may be becoming just as crowded.

The valuation debate hasn't disappeared, and there are still meaningful risks ahead—from earnings to the upcoming share unlock.

But after a nearly 50% decline, a heavily crowded short position, and a successful Starship test flight, the bearish trade is no longer as straightforward as it appeared only a few weeks ago.

The next move will likely depend less on sentiment and more on fundamentals.

And over the coming weeks, the market will finally get plenty of new information to judge them.