SpaceX rebounds 35% from low as short interest drops to 11%

Short sellers who bet against SpaceX are running out of ammunition as the stock rebounds from its post-IPO slump.

SpaceX shares rose about 10 percent to $146 on Wednesday, up roughly 35 percent from the Aug. 5 low, as short sellers retreated from the newly public stock after the first major lockup expiration expanded the tradable float.

"Shorts that wanted to short are out of bullets," said Ihor Dusaniwsky, managing director at S3 Partners. "Only so much money you can put into a trade."

Short interest fell to about 11 percent of publicly traded shares from a peak of 34 percent last week, according to S3 Partners. The decline reflects both bearish investors closing positions and a significant expansion of the float: 911 million shares became eligible for trading last Thursday after the initial lockup period ended, representing roughly 7 percent of shares outstanding and exceeding the 639 million shares sold in the IPO.

The short squeeze dynamic has been amplified by the mechanics of short covering. When bearish investors close positions, they must buy back shares, which pushes the price higher and forces other shorts to cover as well. That feedback loop helped drive the single-day gain on Wednesday.

More supply is coming. Another 319 million shares unlock Aug. 20, followed by roughly 700 million in September and a similar amount in October, according to the prospectus. The additional float could bring fresh volatility as early investors gain more opportunities to sell, though the larger share count also makes it easier for new short positions to open if bearish sentiment returns.

AI Thesis Reshapes Valuation

The rebound follows a sharp post-earnings selloff triggered by the company's first quarterly report, which showed capital expenditures more than doubled revenue. The stock fell from its $135 IPO price as investors weighed the heavy spending required to fund SpaceX's ambitions. But the recovery suggests buyers have accepted the growth story, helped by Elon Musk's projection that AI will account for 99 percent of the company's valuation within five years, with AI revenue surpassing all other businesses by September.

SpaceX's AI segment is scaling quickly. AI revenue reached $2.6 billion in the second quarter, up 247 percent year over year, while total revenue grew 92 percent. The company's compute infrastructure push, including a $60 billion AI acquisition, has led investors to value SpaceX increasingly like a computing infrastructure company rather than a traditional aerospace firm. The launch of Grok 4.6 and expanding compute capacity have reinforced that framing, drawing a new class of investors who previously would not have considered an aerospace stock.

Lockup Wave Ahead

The broader market backdrop was mixed Wednesday, with the S&P 500 up 0.42 percent at 6,287 and the Nasdaq Composite gaining 0.71 percent to 21,103, while the Dow slipped 0.18 percent to 44,521.

Lockup expirations are a standard post-IPO event, but the scale here is unusual. The 911 million shares that unlocked last week were larger than the entire IPO, and the upcoming tranches could add another 1.7 billion shares to the float by October.

For investors, the next few weeks will determine whether the rebound has staying power. The short sellers may be out of bullets for now, but the unlock wave ahead could supply them with fresh ammunition. The combination of a larger float and Musk's aggressive AI narrative means SpaceX's trading dynamics could remain volatile well into the fourth quarter.

This article is for informational purposes only and does not constitute investment advice.