4 Reasons Short Sellers Should Think Twice Before Betting Against SpaceX

SpaceX is trading around $155, still about 111x last year's sales and below its $2.66 trillion peak valuation of 142x 2025 revenue. The article argues the stock remains overvalued, but says shorting is currently unattractive because of 15%-50% borrow costs, phased lockup expirations, potential index inclusion, and Elon Musk-driven volatility. The author expects it to become a better short candidate in the second half of the year as float expands and borrowing fees decline.

Analysis

The key second-order issue is not valuation multiple compression, but float mechanics. With so little lendable supply, the stock can remain disconnected from fundamentals for longer than bears expect, and the real forcing function is not “expensive growth” but gradual inventory release from insiders into a market that is still structurally crowded long. That means the downside path likely arrives in stair-steps after each unlock window, not in a clean post-IPO collapse.

The most interesting catalyst is the interaction between unlock waves and passive demand. If index inclusion is even partially priced in, every incremental share released to the market has a built-in buyer base, which can mute the initial selloff and create a slow-burn distribution process. In that setup, front-running the short thesis too early is dangerous; the higher-probability trade is to wait for borrow to cheapen and for the first unlock to demonstrate whether insiders actually monetize.

The contrarian risk to the bear case is that “overvalued” can stay overvalued if the company becomes a benchmark AI/space proxy and the float remains artificially scarce. The market may be willing to pay up for scarcity plus narrative optionality until the first evidence of post-unlock supply absorption appears. For now, the path of least resistance is to treat this as a timing problem, not a valuation call.

Relative to named peers, TSLA is the only symbol here with an obvious transmission channel because Musk-driven promotion and index-flow dynamics can spill into sentiment around adjacent growth/innovation baskets. NFLX and NVDA are not direct read-throughs, but any broad retail “mega-cap winners” rotation could temporarily support them if capital rotates away from speculative newly listed names.

Key Decisions for Investors

• Do not initiate a cash short yet; wait for the first post-earnings unlock wave and a measurable decline in borrow rates before sizing any bearish position. Risk/reward is poor while borrow remains 15-50% annualized.
• If borrow becomes available, prefer a 3-6 month put spread rather than stock short: the thesis is unlock-driven supply overhang, not an immediate breakdown. Structure for downside into the second and third unlock windows, not the next few sessions.
• Pair trade idea: short the newly listed name against a long basket of high-quality AI/tech compounders (e.g., NVDA) if/when lockup supply begins to clear. This isolates narrative decay and reduces market beta risk.
• Set a tactical alert around the first unlock date and the five-day price trigger level; if the stock fails to hold above the trigger into the release, expect faster insider distribution and better short entry conditions over the following 2-4 weeks.
• For TSLA, treat any Musk-driven sympathy bid as a hedgeable sentiment event rather than a fundamental change; use short-dated call spreads only if social-media volatility spikes, with hard profit-taking given event risk can reverse in days.