New York, June 9 - Short sellers beware: SpaceX's IPO may be too hot to handle. With a price-to-revenue multiple of 56 and concerns over governance, the company is a logical target for short bets. Yet, the bull run and its $1.75 trillion valuation have many bears on edge.
"It's an extremely risky short play," said Gabriel Shahin of Falcon Wealth Planning. Bullish interest from retail and institutional investors could make a safe short bet elusive. Morningstar analysts also flagged uncertainties around the xAI platform and orbital data centers.
A wait-and-see approach is common. "There are large natural buyers in the indexes that will almost immediately add the stock," said Mark Spiegel of Stanphyl Capital Partners, despite deeming SpaceX "grotesquely overvalued." The IPO's float is under 5% of outstanding shares, and many may wait for unlock dates for easier borrowing.
Shorting Musk's Tesla has been costly. Since 2021, short sellers lost $27 billion, and shares have surged over 2,500% in a decade. Musk's public battles with shorts, including the "funding secured" tweet in 2018, have added to the pain.
Broader challenges persist. The Goldman Sachs Most Shorted Index is up 29% this year, and the conviction of activist short seller Andrew Left has cast a chill. Even skeptical investors may shy away from shorting a new issue like SpaceX.
"If SpaceX pops 100% on its IPO, is that still the best short out there?" asked Mike Treacy of Apex Fintech Solutions. "I just don't think it is."