SpaceX confronts a pivotal market test as it prepares its first quarterly report as a public company amid heavy short interest.
Less than two months after its public offering and a brief stint above a 2 billones de dólares market capitalization that earned it a spot in the Nasdaq-100 index, SpaceX faces intense scrutiny over its soaring valuation. The company’s stock has endured a downturn, as the firm approaches its first earnings release as a publicly traded entity, the broader market is demanding concrete financial results to justify a forward price-to-earnings ratio sitting well above 300.
Short Sellers Pile In Ahead of Multi-Billion-Dollar Share Release
Market skeptics have heavily increased their bearish bets as the company prepares for a massive influx of newly tradeable stock. According to data from S3 Partners reported by Investing, short interest surged to 219.3 million shares as of 29.07.2022. This represents roughly 34% of the shares available for public trading, a dramatic leap from the 23.3 million shorted shares recorded when data was first reported on 16.06.2022.
Analysts point directly to the impending expiration of share lock-up agreements as the primary catalyst for these aggressive short positions.
The big bet right now is on the unblocking and, practically speaking, that nothing will be announced in the results that can compensate for the volume of unlocked shares hitting the market. Sam Pierson, Director of Research at S3
SpaceX has scheduled its first quarterly results as a public company for August 4, less than two months after its initial public offering. Two days later, up to 911.5 million shares could become available for trading under the company’s staggered lock-up agreement. SpaceX currently maintains approximately 640 million shares available for trading, accounting for about 5% of its total outstanding shares. The first maturity of the lock-up period will more than double that proportion to approximately 12%, according to S3, as a series of lock-up releases begins following the presentation of second-quarter results.
The market expects that 20% of the shares will be released on August 6, followed by several additional tranches of approximately 7% each, and a large block after the third quarter. This wave of insider selling will dilute the public float, exerting strong downward pressure on the share price and creating a wall of supply.
Financial Realities Meet the AI and Space Narrative
Tuesday will mark a milestone for SpaceX as it publishes its first results as a public company, testing whether revenue growth matches the artificial intelligence and space narrative that justifies its valuation. Starlink connectivity remains the core of the business, representing around 60% of total company revenue and expected to be the only division reporting solid growth exceeding 30% alongside a positive operating result. The artificial intelligence segment, xAI, will show just the beginning of an extreme growth trajectory, with projections pointing to a 433% year-over-year growth followed by an additional 150% in 2027 to place revenues above those currently recorded by Anthropic or OpenAI.
Despite these astronomical sales, the market consensus indicates that net profit and EPS will remain in the red. Both xAI and the space segment are burning billions of dollars in Research and Development, putting Elon Musk’s strategy of scaling first and earning profits later to a key test.
Navigating the Investor Wall of Supply
The collision between heavy capital burn and extreme valuation multiples has created a difficult environment for equity holders.
This contraction underscores the vulnerability of high-multiple growth stocks when market momentum stalls.
Option markets are currently pricing in a move of nearly 13% in the share price ahead of the report. While there is a bit of friction for shorts wanting to hold their position through the next week, Pierson noted that after that, the cost of the borrow is very likely to become easy to obtain again once the initial wave clears.
