Shares of SpaceX have fallen below their initial public offering price, allowing short sellers to book substantial unrealized gains from the decline.

According to the latest data from S3 Partners, the paper profits for SpaceX short sellers have climbed to $3.88 billion. The stock has been hovering around its IPO price of $135 and has declined for four consecutive trading sessions, with its intraday low touching $132.15. Concurrently, approximately 181 million shares, representing 28% of the float, have been sold short—a proportion that ranks among historically high levels for a newly public company within its first month.

Market pessimism continues to intensify. Over the past week, new short sales have added roughly 37 million shares, valued at around $5 billion. Investors are closely watching two upcoming catalysts: the potential 13th test flight of the Starship rocket, which could occur as early as this Thursday, and the release of the company's first quarterly earnings report. The latter report will trigger the expiration of lock-up periods for certain shareholders, potentially leading to a significant influx of shares into the market over subsequent weeks.

Market Value Plummets Following Steep Share Price Decline

Since its closing high on June 16th, the share price of SpaceX has fallen by approximately one-third, erasing over $860 billion in market capitalization. This decline signals the rapid fading of the high-valuation premium the company enjoyed in the immediate aftermath of its public debut.

Ihor Dusaniwsky of S3 Partners noted that the recent share price weakness has both encouraged short selling and reflects market positioning ahead of the upcoming lock-up expirations.

Dual Headwinds: Lock-Up Expiry and First Earnings Report

The sharp increase in short interest coincides closely with the timing of the company's inaugural quarterly earnings release. Following the report, some early investors will become eligible to sell their shares for the first time, initiating a window of several weeks during which a substantial number of shares could be unlocked.

This potential supply-side pressure is contributing to increased market caution regarding the stock's near-term trajectory. The current 28% short interest ratio is notably high for a company in its first month of trading, indicating a consensus among institutional investors about near-term price pressure.

Beyond these fundamental pressures, the 13th test flight of the SpaceX Starship rocket, potentially scheduled for this Thursday, is viewed by the market as a significant event for short-term price movement. The outcome of the test could influence investor confidence in the company's technological progress and directly impact positioning adjustments for both bullish and bearish traders.