A SpaceX rocket launch pad [Reuters/Yonhap]
A SpaceX rocket launch pad [Reuters/Yonhap]

Short sellers who bet against Elon Musk's SpaceX are pulling back as the stock stages a sharp recovery after a weak stretch following its listing.

Citing data from financial analytics firm S3 Partners, CNBC reported Wednesday that SpaceX's short interest has fallen to about 11 percent of shares outstanding — down sharply from a peak of 34 percent last week.

The decline reflects two forces: short sellers unwinding their positions as the share price climbed, and a significant increase in the number of shares available to trade following the expiration of an early lock-up period.

SpaceX shares have rebounded more than 40 percent from their Aug. 3 low. The stock surged 11 percent on Wednesday to $148, roughly 10 percent above the IPO price of $135.

When a shorted stock rises, short sellers must buy shares to close out their positions, which adds further upward pressure on the price.

"Short sellers don't have any more ammo," said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners. "They want to short more but they're capital-constrained."

The expiration of an early lock-up period last week also pressured short sellers, as 911 million shares became newly available for trading.

That newly unlocked supply — about 7 percent of SpaceX's total shares outstanding — exceeds the 639 million shares sold in the IPO.

With more shares in circulation, short interest as a proportion of tradable stock naturally declined.

SpaceX has been volatile since its listing.

After a brief initial rise, concerns about heavy spending weighed on the stock, and short sellers piled in, keeping it under pressure for an extended period.

The shares fell further after the company's first earnings report last week showed capital expenditures more than double its sales.

The float is set to grow further. According to the company's prospectus, approximately 319 million additional shares are due to come off lock-up on Thursday, around 700 million more in September, and a similar volume in October.


husn7@heraldcorp.com