Forty million SpaceX shares sold short. That's the number. S3 Partners says it represents 5% to 7% of publicly available shares. These people looked at a company that lands rockets on barges in the ocean and decided now's the time to fade it.
The math here is simple. You borrow shares of a private company with limited float. You sell them. Then you wait for Elon Musk to tweet something unhinged at 3am and tank the stock. Except the stock doesn't trade on an exchange where tweets matter. And the company keeps launching satellites while you're paying borrow fees that would make a payday lender blush.
S3 Partners felt compelled to estimate this. Someone ran the numbers on illiquid private shares being shorted and thought yeah, people need to know about this developing crisis. The crisis being that hedge funds found a new asset class to set money on fire with.
Many short sellers remain afraid to bet against Musk. Smart. The ones who aren't afraid are currently explaining to their risk managers why shorting a company that monopolizes American space launch capability seemed like edge. "But he posted a meme about Dogecoin" is not a thesis. It's a cry for help.
Five to seven percent short interest on a private company. That's not a trade. That's a performance art piece about hubris. These shares trade over-the-counter in blocks large enough to require a team of lawyers and a blood oath. The spread is wider than the gap between launch attempts. But sure, short it. What could go wrong besides everything.
The best part? They're not even hiding. S3 Partners published the estimate. Someone at a fund is reading this right now, jaw clenched, calculating their mark-to-market while a Falcon Heavy puts another payload into orbit.
Shorting SpaceX because you're afraid of missing the next Tesla is like jumping off a bridge because you're afraid of heights.
Photo by Brecht Corbeel on Unsplash
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