Key facts
- SpaceX's upcoming IPO is anticipated to be the largest ever, potentially valuing the company at $1.75 trillion.
- Short sellers are expected to be cautious due to SpaceX's high valuation and Elon Musk's track record with Tesla.
- The company's valuation exceeds most mega-caps, with uncertainties surrounding its xAI platform and orbital data centers.
- The IPO's public float is expected to be less than 5% of outstanding shares.
Short sellers are likely to approach the upcoming initial public offering (IPO) of Elon Musk's SpaceX with significant caution, according to market observers. Despite SpaceX's high valuation, estimated at $1.75 trillion and a price-to-revenue multiple of 56, and potential governance concerns, the prevailing market sentiment and the history of betting against Musk's ventures present formidable challenges for short positions.
The recent bull run in technology stocks, which has seen several companies surpass $1 trillion in market capitalization, has historically been detrimental to short sellers. This environment, coupled with SpaceX's high profile and strong interest from both institutional and retail investors, suggests that immediate, aggressive shorting may be a risky strategy. Analysts note that the economics of SpaceX's xAI platform and its orbital data center technologies remain uncertain, which could attract short interest under different market conditions.
Historically, shorting Musk's other major company, Tesla, has proven to be a largely unprofitable endeavor, with significant paper losses for short sellers over the past decade. The upcoming SpaceX IPO is expected to be the largest on record, valued at $75 billion, but with a public float of less than 5% of its shares, making borrowing shares for shorting potentially costly and difficult, especially in the immediate post-IPO period. Many investors are expected to adopt a wait-and-see approach, potentially considering short positions after initial share unlock dates when more stock becomes available.