Elon Musk said short-sellers betting against SpaceX have a "very low survival probability" in statements published late July [1].
The warning comes as investors engage in a high-stakes battle over the valuation of the aerospace company, with billions of dollars tied to the stock's movement.
Musk said that the bets against SpaceX now equal approximately 32% of the company's float [2]. According to the CEO, these short positions total roughly $25 billion [2]. He said that such a position is unsustainable given the business and growth prospects of the company.
"Short sellers betting against SpaceX have a very low survival probability," Musk said [2]. In a separate instance, he said to investors, "You probably won't survive" [3].
Despite the warnings from the CEO, some data suggests the short-sellers have already seen significant gains. A report from Reuters noted that short sellers targeting SpaceX shares were sitting on an estimated $15.5 billion profit as of July 23 [4].
The tension between Musk and the short-sellers highlights a volatile period for the company's shares. While the CEO maintains that the company's long-term trajectory makes shorting a dangerous gamble, the current profit margins for those betting against the stock suggest a disconnect between Musk's valuation and market sentiment [4].
Musk has a history of public disputes with short-sellers across his various ventures. By framing the current situation as a matter of "survival," he is signaling that a potential price correction or a surge in company value could trigger a short squeeze, a scenario where short-sellers are forced to buy back shares at higher prices to cover their losses [2].
“"Short sellers betting against SpaceX have a very low survival probability."”
This confrontation underscores a critical tension between SpaceX's internal growth projections and external market speculation. While Musk views the $25 billion short interest as a fragile bubble destined to burst, the reported $15.5 billion in profits for short-sellers indicates that the market has recently bet on a decline in share value. If SpaceX achieves a major operational milestone, the high percentage of the float held by short-sellers could lead to a rapid, volatile price increase.
