SpaceX’s aborted Starship test flight on July 17 did more than push the stock below its IPO price for the first time — it handed short sellers a paper tally of up to $8.7 billion, according to Ortex. The failed launch, caused by two Raptor engines that needed to be swapped out just before liftoff, sent shares sliding 5.4% to $123.99 (€108.40) that day and deepened a selloff that has already erased more than a trillion dollars from the company’s market capitalization since mid-June. The next attempt is set for Monday, July 20, with a launch window opening at 18:45 local time.
The scale of bearish positioning has become extraordinary. Ortex reported that 49% of SpaceX’s free float was out on loan, while S3 Partners calculated a slightly lower paper gain of roughly $5 billion on a short position of about 192 million shares, representing 30% of the free float with a nominal value of $25 billion. The stock closed the week at €108.40, a five-day loss of nearly 15% and barely 1% above its 52-week low of €107.34, set on the same day as the aborted launch.
CEO Elon Musk hit back on X, warning on July 18 that “the probability of a large short position against SpaceX surviving for long is very low.” He reinforced the message a day later, cautioning institutions with outsized bearish bets. The plea came as his own fortune, tracked by Bloomberg, shrank from a peak of $1.32 trillion to $792 billion, with Tesla shares trading 23% below their yearly high adding to the pain.
Technical indicators suggest the market is strained but not panicked. The 14-day relative strength index sits at 34.6, a level often interpreted as oversold, while the annualized 30-day volatility of 93% underscores the violent swings since the company’s Nasdaq debut in early summer. The stock is now 44% below its all-time high from mid-June.
Should investors sell immediately? Or is it worth buying SpaceX?
The upcoming Starship flight carries weight beyond a routine test. It is only the second outing for the V3 version of the vehicle following a May mission that fell short due to multiple engine failures. This time, SpaceX plans to deploy 20 V3 Starlink satellites with laser links for the first time, and a successful deployment would signal that the company is back on track for a crucial NASA lunar test flight next year. Another scrub would prolong the series of technical setbacks that have dogged the stock since the IPO.
Adding to the pressure, the first lock-up expiration is fast approaching. Roughly 900 million insider shares are due to be released after the company reports its maiden quarterly results as a public company, expected in late July or early August. The potential overhang has contributed to analyst dispersion: JPMorgan has turned cautious, while Raymond James maintains a bull-case target of $800, compared with the consensus average of $235.34, which still implies roughly 90% upside from current levels.
Not everyone is fleeing. Cathie Wood’s ARK Invest took advantage of the weakness, buying 147,623 shares across four ETFs on July 17 for $18.3 million, with the flagship ARKK fund accounting for the bulk. Since the IPO, ARK has invested more than $475 million in SpaceX, offsetting the purchases by selling 26,002 Robinhood shares. On the corporate front, SpaceX is reportedly in talks with the Pentagon for a multi-billion-dollar AI data center contract, a potential revenue anchor that could help offset the $6.4 billion operating loss posted by its xAI unit in 2025 and the company’s overall net loss of $4.9 billion.
All eyes are now on Monday’s launch attempt. A clean flight — especially the first successful deployment of the V3 Starlink satellites — could calm the selling wave that has battered the stock. But any further technical hiccup would only deepen the narrative of a company struggling to match its pre-IPO hype with operational reality, just as the lock-up clock ticks and the quarterly report looms.
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