SpaceX Faces 'Fatal Blow'? From IPO Myth to Short-Seller Target, Stock Plunges Over 40% in One Month

Just one month ago, when Elon Musk rang the opening bell at Nasdaq, rocket company SpaceX (SPCX-US) was Wall Street’s most sought-after IPO. With a $75 billion fundraising, it set a global IPO record, briefly reaching a market capitalization of over $2.6 trillion—surpassing giants like Microsoft and Amazon—and seemingly validating Musk’s space ambitions.

However, the capital feast has abruptly soured. On June 12, SpaceX listed on Nasdaq at $135 per share, briefly surging to over $225, pushing its market cap above $2.6 trillion. But by mid-July, the stock began a steep decline, falling below its IPO price of $135, with the latest closing price around $124—down over 40% from its mid-June peak.

Both institutional investors in the IPO and South Korean retail investors who bought nearly $800 million worth of shares on day one are now almost entirely underwater.

The free-falling stock has filled short-sellers’ pockets. Market data shows short positions have generated approximately $4 billion in paper profits over the past month, with some estimates nearing $8.7 billion.

More alarming is the speed of shorting: initial short interest was just 5% to 7% of float, but within weeks it surged to around 30%. Shorted shares ballooned from about 40 million to over 180 million, representing a short position worth roughly $25 billion.

Analysts note such short concentration is extremely rare for a newly listed stock. Rather than taking profits, short-sellers are doubling down.

George Noble, a seasoned investor who once worked with famed investor Peter Lynch, is among the most vocal, setting a $30 target—about a quarter of the current price.

Noble’s argument centers on the extreme scarcity of freely tradable shares at listing: less than 5% of total shares were float, and rapid inclusion in the Nasdaq 100 and Russell indices forced passive funds to buy aggressively despite tight liquidity, artificially inflating prices.

He calls it the 'largest exit liquidity trade in history,' enabling insiders to cash out at peak valuations while retail investors get stuck at the top.

Fundamentally, SpaceX’s sky-high valuation isn’t supported by current financials. In 2025, the company reported $18.7 billion in revenue but a $4.9 billion net loss. In Q1 2026, revenue was under $4.7 billion, growth slowed from 33% to 15.4%, and quarterly losses widened to $4.276 billion—nearly matching the prior year’s full-year loss.

Yet, the market assigned an astronomical valuation: an IPO price-to-sales (PSR) ratio over 90x, peaking near 140x—far exceeding Tesla’s ~15x at the time.

Michael Burry, the inspiration behind 'The Big Short,' publicly questioned whether SpaceX’s fundamentals justify a trillion-dollar-plus valuation.

The turmoil isn’t limited to equities. SpaceX’s corporate bond issuance earlier this year was oversubscribed by multiples, but within weeks, sentiment reversed. Long-dated bond yields spiked, prices fell below par, and credit spreads widened.

Despite maintaining investment-grade ratings, actual trading spreads have deteriorated to levels worse than some non-investment-grade issuers. Credit Default Swap (CDS) costs have also risen sharply.

In essence, the market is pricing SpaceX’s default risk using 'junk bond' logic.

Beyond the current slide, the looming unlock of shares is what truly worries markets. At listing, freely tradable shares were less than 5% of total shares. As multiple pre-IPO investor lock-up periods expire, billions of shares could flood the market in the coming months. By year-end, the float could jump to around 40% of total shares—nearly a 900% increase in tradable supply.

A North American hedge fund trader bluntly stated: 'Even if SpaceX announced gold on the moon, the market likely wouldn’t have enough capital to absorb the upcoming unlock selling pressure.'

Dec Mullarkey, Managing Director at SLC Management, commented: 'Investor enthusiasm for SpaceX has clearly cooled. Both stock and bond markets are repricing for higher risk.'

From record-breaking IPO to dual equity and credit selloff, from mass retail demand to institutional shorting—SpaceX’s capital narrative has shifted from deification to disillusionment in just one month.

When a company still unprofitable, losing over $4 billion per quarter, carries a valuation multiple far exceeding peers, market correction may have only just begun. And the much larger wave of unlock selling pressure has yet to arrive.