4 Reasons Short Sellers Should Think Twice Before Betting Against SpaceX

SpaceX trades around $155 after peaking at $225.64, still valued at about 111x last year's sales and 142x 2025 revenue at the high. The article argues the stock is overvalued but says shorting is difficult now because the float is tight, borrowing costs are high at roughly 15% to 50% annually, and upcoming lockup expirations could create the real short opportunity later this year. It also flags possible Nasdaq-100 inclusion and Elon Musk-driven social media risk as additional bullish pressures.

Analysis

The setup is less about fundamental overvaluation and more about a temporary microstructure squeeze. With float still constrained, the marginal price setter is not long-only valuation capital but a mix of momentum buyers, index-hugging allocators, and anyone forced to cover into limited lendable supply; that can keep the stock elevated longer than the business would justify. The key implication is that “too expensive” can remain true for months while “easy short” remains false, which matters for timing and sizing.

The first real inflection is not a valuation reset, but a change in borrow economics. As unlock waves expand tradable supply, the stock should move from a scarcity premium toward a more normal lending regime, which mechanically lowers borrow fees and improves short viability before the largest insider sellable tranche hits. That creates a second-order loop: rising liquidity enables more shorting, which in turn caps upside and makes any post-unlock bounce less violent than the initial squeeze.

Index inclusion risk is the biggest underappreciated bullish offset to the eventual unlock pressure. If passive demand begins to absorb the newly released float, the market may temporarily re-rate the name on “must-own” technical flows rather than fundamentals, especially if it enters benchmark products that force daily accumulation. That means the optimal bearish window may be after the first meaningful unlock but before any formal index decision, when supply rises faster than passive demand.

The contrarian view is that the current price may already be discounting a large portion of the near-term unlock story. If early holders are financially sophisticated and hedge before selling, the supply overhang could be slower and less disruptive than headline percentages suggest, while the real downside catalyst remains a broader risk-off tape rather than the lockup alone. In that case, the stock can drift sideways at an inflated multiple until one of three things breaks: borrow becomes cheap, passive demand disappoints, or management sentiment turns against the tape.

Key Decisions for Investors

• Avoid outright short exposure now; wait for the first unlock wave to clear and for borrow to fall into a more workable range. The risk/reward is poor today because carry costs can overwhelm any near-term downside in a name still prone to squeezes.
• If expressing a bearish view, prefer a staged bearish entry 1-2 weeks after the first lockup event, when liquidity is improving but index support is not yet fully embedded. Structure via put spreads rather than naked shorts to cap borrow and squeeze risk.
• Watch for a Nasdaq-100 inclusion announcement as a tactical long catalyst; if it occurs, buy dips only on confirmation and expect forced flow to dominate for several sessions. Any long should be sized as a trade, not a valuation investment.
• Pair the name against a high-beta growth basket or against a more liquid mega-cap tech proxy once borrow normalizes; the relative-value expression is cleaner than a standalone short. This is especially attractive if market breadth rolls over while the stock remains mechanically supported.
• Set a trigger to reassess after the late-October/early-November unlock wave: that is the first point where supply, borrow normalization, and insider monetization can align into a durable bearish catalyst.