SpaceX IPO: Would Shorting It Have Worked? The Math Behind the Trade

SpaceX finally went public in June 2026, and the market immediately delivered one of the most extreme IPO openings in recent history.

The company priced its initial public offering at $135 per share. When trading began on June 12, shares opened at $150, already 11.1% above the IPO price. During the session, SPCX climbed as high as $176.52 before closing at $160.95. By June 16, the stock had reached an intraday high of $225.64.

Then the story changed.

Over the following weeks, SpaceX fell sharply, eventually trading below its $135 IPO price and reaching an intraday low of $104.83 on August 3. By September 21, shares were trading around $152.44, only modestly above the $150 opening price.

That creates a fascinating question for investors:

If you had tried to short SpaceX when it first started trading, would you actually have made money?

The answer is much more complicated than "SpaceX went down, so the short worked."

The real answer depends on your entry price, your exit price, your ability to borrow shares, your margin requirements, the timing of index inclusion and the violent price swings that happened before the eventual decline.

SpaceX Was Not Just a Rocket Company

One of the biggest mistakes investors could make when analyzing SpaceX is thinking about it as simply a rocket manufacturer.

The company that went public in 2026 was a much broader collection of businesses.

Its SEC filings describe three major operating segments: Space, Connectivity and AI.

The Space business includes Falcon 9, Falcon Heavy, Starship and related development and launch services. In 2025, the Space segment generated $4.086 billion of revenue.

Connectivity is primarily powered by Starlink. It includes consumer broadband, enterprise connectivity, government solutions and mobile services. In 2025, Connectivity generated $11.387 billion of revenue and $4.423 billion of operating income.

Then there is AI.

SpaceX's AI segment includes infrastructure, advertising, subscriptions and businesses associated with the xAI combination. The company disclosed that xAI was acquired by SpaceX in February 2026, while X had previously been acquired by xAI. That means investors were no longer valuing a pure aerospace company. They were effectively looking at a vertically integrated combination of space infrastructure, satellite communications and AI.

This matters enormously for a short thesis.

A traditional valuation analysis might say that a company with enormous growth expectations but weak current earnings deserves skepticism.

But SpaceX was not a single business with a single economic profile.

Its Connectivity business was already generating billions in operating income. At the same time, the AI segment was spending heavily for future growth. In 2025, AI generated $3.201 billion of revenue but recorded a $6.355 billion operating loss.

In other words, the company combined a rapidly growing cash generating connectivity business with extremely capital intensive future businesses.

That makes valuation far harder than simply applying a multiple to rocket launches.

The Valuation Was Enormous

At its IPO price of $135, SpaceX raised approximately $75 billion in its base offering by selling 555,555,555 shares. The underwriters also received a greenshoe option for another 83,333,333 shares. The company ultimately issued approximately 638.9 million shares through the offering, generating approximately $85.675 billion in net proceeds.

Reuters reported that the IPO price implied a valuation of about $1.77 trillion. The stock then opened at $150 and briefly pushed the company's market capitalization above $2 trillion, reaching more than $2.25 trillion during the first trading session.

Now compare that valuation with the company's 2025 revenue of $18.674 billion.

At a $1.77 trillion valuation:

$1.77 trillion / $18.674 billion = approximately 94.8 times revenue.

At $2.25 trillion:

$2.25 trillion / $18.674 billion = approximately 120.5 times revenue.

Those numbers do not automatically prove a stock is overpriced. A company can justify a high revenue multiple if investors expect extraordinary future growth.

But they do explain why many investors saw the IPO as a potential short setup.

Warren Buffett once summarized a central principle of investing with a simple line:

"Price is what you pay; value is what you get."

Warren Buffett

The interesting part of SpaceX was the enormous gap between what the market was willing to pay and what the company's historical financial statements could justify using conventional valuation methods.

That gap was the foundation of the bearish thesis.

But a good short trade requires more than a good bearish thesis.

The First Problem: IPO Price Is Not the Same as Trading Price

This is where the theoretical short gets tricky.

The IPO price was $135.

But ordinary investors did not simply receive the ability to sell SpaceX short at $135.

The stock opened publicly at $150.

That difference matters.

Suppose an investor somehow managed to short SpaceX at exactly $150 on the opening print.

The basic short formula is:

Profit = Short entry price minus Cover price

If the investor covered at $152.44 on September 21:

$150.00 minus $152.44 = minus $2.44 per share.

That is a loss of:

$2.44 / $150 = 1.63%

So a hypothetical $10,000 short position initiated at $150 would have produced approximately a $163 loss before borrowing costs, commissions and financing effects.

That does not look impressive.

But that is not the whole story.

The stock reached $225.64 only two trading sessions after the debut.

At that price, a $150 short would have an unrealized loss of:

($225.64 minus $150) / $150 = 50.43%

On a $10,000 short, that is approximately $5,043 in unrealized losses.

And that is where short selling becomes psychologically and financially different from buying a stock.

An investor who buys a stock at $150 can theoretically wait for years for the company to recover.

A short seller does not have that luxury.

The broker can demand additional margin, raise house requirements or close positions if the trader no longer has sufficient collateral. The SEC explicitly notes that short sales are subject to margin rules, borrowing costs and other fees. Brokerage firms can also impose stricter house requirements than regulatory minimums.

The Math Gets Interesting at the Extremes

Now imagine three different investors.

Investor A shorts at $150 and covers at $152.44.

Result: approximately minus 1.63%.

Investor B shorts at $150 and somehow survives the entire rally, then covers at the August 3 low of $104.83.

Result:

($150 minus $104.83) / $150 = 30.11%

A $10,000 short would produce approximately $3,011 of gross profit.

Investor C waits for the post IPO peak of $225.64 and then shorts, eventually covering at $152.44.

Result:

($225.64 minus $152.44) / $225.64 = 32.44%

The problem with Investor C is obvious.

That entry point is only visible with hindsight.

In real time, buying or selling at the exact top is impossible to know.

Benjamin Graham's famous "Mr. Market" framework captures the underlying problem. The market can temporarily offer prices driven by emotion, expectations and changing sentiment rather than a stable estimate of intrinsic value. Graham's ideas are often summarized through the metaphor of the market as a voting machine in the short run and a weighing machine in the long run.

SpaceX demonstrated the "voting machine" part almost perfectly.

The stock did not move gradually toward fundamental value.

It went from $135 at the IPO price to $225.64 in days, then eventually down to $104.83.

The path mattered more than the final destination for anyone using leverage.

The chart below puts all three trades on the same price path, so you can see which one was actually right.

So Would the Short Have Worked?

There are really two different questions.

Would SpaceX eventually trading below $135 have made a bearish position profitable?

Yes, potentially.

Would shorting at the IPO opening have been a clean trade?

No.

The difference is crucial.

A short position initiated near $150 could have become highly profitable later, but only if the trader survived a more than 50% adverse move first.

The idea that "I knew the IPO was overvalued, therefore I could have shorted it" ignores this path dependency.

A short seller can correctly identify a long term decline and still lose money.

The ETF Effect: The Part Many Investors Missed

There was another important force surrounding SpaceX.

Index inclusion.

SpaceX was not added to the Nasdaq-100 on its IPO date.

That detail is extremely important.

The company went public on June 12.

Nasdaq announced on June 26 that SpaceX would become a Nasdaq-100 constituent before market open on July 7. Nasdaq said the Nasdaq-100 was tracked by more than 200 investment products representing more than $800 billion in assets globally.

This is where passive investing created a structural source of demand.

An index fund is designed to track an index. A fund like Invesco QQQ tracks the Nasdaq-100, and QQQM is also based on the same index. These funds generally hold the index constituents or otherwise replicate their exposure according to their methodologies.

When SpaceX entered the Nasdaq-100, index tracking funds needed to increase their exposure to SPCX.

That does not mean every ETF in existence was legally forced to buy SpaceX.

It means funds designed to track that specific index had a portfolio construction reason to add the stock.

Reuters reported that J.P. Morgan estimated passive inflows associated with the Nasdaq-100 inclusion could reach as much as $4.3 billion.

The effect was not theoretical.

Nasdaq itself reported that when SpaceX was added on July 7, it carried a weight of approximately 1.3%. Nasdaq's own market commentary also noted that passive demand did not prevent SPCX from falling more than 6.5% that day.

That is a useful lesson.

Forced or systematic buying can create demand, but it does not guarantee a rising stock price.

A large buyer can meet an even larger seller.

The September Rebalance Makes the Story Even More Interesting

The index effect did not stop in July.

On September 21, 2026, SpaceX's Nasdaq-100 weight increased from approximately 1.28% to 2.82%, according to Bloomberg data reported by Barron's.

That is an increase of:

2.82% minus 1.28% = 1.54 percentage points.

At first glance, 1.54 percentage points might not sound enormous.

But apply it to very large passive funds.

QQQ had approximately $484.28 billion in assets under management on September 18, while QQQM had approximately $105.70 billion.

Together:

$484.28B + $105.70B = approximately $589.98B.

Now apply the 1.54 percentage point weight change:

$589.98B × 1.54% = approximately $9.09B.

That does not mean QQQ and QQQM were required to buy exactly $9.09 billion of SpaceX shares.

It is an illustrative estimate of the additional index exposure implied by applying the weight increase mechanically to those two funds.

Actual transactions can differ because of fund flows, sampling, timing, creation and redemption activity, portfolio implementation and other factors.

Still, it demonstrates the scale of the mechanism.

A change in index weight can represent billions of dollars of potential demand.

This is one reason investors sometimes describe index inclusion as a mechanical buyer.

It is not emotional demand.

It is portfolio construction demand.

The Borrow Problem: Could You Actually Have Shorted SpaceX?

This is where the original idea needs an important correction.

It is not accurate to say that SpaceX could never be shorted because brokers simply prohibited it.

Short selling a public company is legal in the United States.

But it requires something fundamental:

Borrowable shares.

A short seller needs to sell borrowed stock or have the necessary arrangement to borrow it. The SEC explains that brokerage firms typically source securities from their own inventories, margin accounts of other customers or other lenders.

Interactive Brokers, for example, explicitly requires short sellers to use available borrow and says short sale orders are subject to approval. Its shortable securities system shows the quantity of shares available, number of lenders and indicative borrow rates.

For a newly listed company with a limited public float, borrow availability can initially be extremely constrained.

That is exactly what happened around SpaceX.

The important distinction is timing.

Immediately around the IPO, a retail trader could not simply assume that the new SPCX ticker would have an unlimited supply of borrowable shares.

The trading float was limited, many shares were subject to restrictions, and demand for the stock was extraordinary.

The IPO prospectus also described a completely different kind of short selling performed by the underwriters.

They were allowed to create a short position by selling more shares than they were initially obligated to purchase, then potentially covering that position through the 83.33 million share greenshoe option. This was part of the IPO's stabilization mechanism and was not equivalent to a normal retail investor opening a speculative short.

That distinction is essential.

The underwriters had a specific contractual mechanism.

A normal investor did not.

But Shorting Became Possible

This is where the real world outcome becomes especially interesting.

By June 23, just eleven days after the IPO, Reuters reported that approximately 5% to 7% of SpaceX's public float, or around 40 million shares, had been sold short according to S3 Partners.

At that point, shares were reportedly becoming easier to borrow, with short sellers paying approximately 60 basis points to borrow the stock.

So the statement "nobody could short SpaceX" was not true for the post IPO period.

Short selling became an actual market activity.

And eventually it became very large.

Reuters reported on July 1 that nearly one third of SpaceX's tradable shares were sold short and that shorts were already sitting on approximately $750 million of paper losses at that point.

That is almost a perfect illustration of the danger.

The bearish thesis was getting stronger for some traders, but the stock had already moved sharply against them.

Then the trade changed again.

By July 23, Reuters reported that SpaceX short sellers had accumulated an estimated $15.5 billion in paper profits since the IPO, according to Ortex, as the stock had fallen below the $135 IPO price.

This is the part that makes the SpaceX story so useful for understanding short selling.

The market can move from:

• Shorting seems impossible.
• Shorting is possible but painful.
• Short sellers are making billions on paper.

All within weeks.

The Cost of Borrowing Matters More Than Most People Think

A short position has a cost that a long position generally does not.

You can lose money from the stock moving against you.

But even when the stock moves in your favor, the economics are affected by borrowing costs.

Suppose a trader shorted $10,000 of SpaceX stock with an annual borrow rate of 0.60%.

A simplified 30 day borrowing cost would be:

$10,000 × 0.006 × 30 / 360 = approximately $5.

That is not much.

But borrowing costs are dynamic.

EquiLend reported that SpaceX borrow demand intensified sharply after the IPO, with borrow quantity increasing from 18.6 million shares on the first trading day after the IPO to 211.6 million by July 10. Its data also showed utilization above 77% and a cost to borrow of approximately 150 basis points by mid July.

Again, the exact cost for an individual broker and moment could differ.

But the direction is important.

When many investors want to short the same scarce security, borrowing becomes more expensive.

This creates a feedback loop.

Higher price volatility increases margin risk.

Higher short interest increases demand for borrow.

Higher borrow demand can increase financing costs.

And rapid price increases can trigger forced buying by short sellers.

That is the short squeeze risk.

Could an All In Short Have Been a Disaster?

Absolutely.

Imagine someone decided on June 12:

"SpaceX is worth too much. I am going to short it and wait."

They sell $10,000 worth at $150.

Two trading sessions later, the market prints $225.64.

The short is now:

$225.64 × 66.67 shares = approximately $15,043 of replacement value.

The unrealized loss is approximately $5,043.

That is a 50.4% loss relative to the original short notional.

If the trader had insufficient collateral, the broker could force a partial or complete cover.

The trader could be right about the long term valuation and still never reach the eventual decline.

That is the core asymmetry of short selling.

A long position has a theoretical maximum loss of 100% because a stock cannot normally fall below zero.

A short position has theoretically unlimited loss because the stock can continue rising.

SpaceX demonstrated the practical version of that asymmetry in spectacular fashion.

What About the $104.83 Low?

This is where hindsight can make the trade look deceptively easy.

If you had shorted at $150 and covered at $104.83, the gross return would have been 30.11%.

But notice what had to happen.

You had to survive the move:

$150 → $176.52 → $225.64 → $104.83.

The eventual direction was correct.

The path was brutal.

That is why the sentence "the short would have worked" is incomplete.

The more precise statement is:

A short position could have been profitable if it was initiated and maintained through the correct segment of SpaceX's post IPO decline.

But a short entered at the opening price did not produce a profit by September 21, 2026, when SPCX was around $152.44.

The trade was extremely path dependent.

And that is exactly why short selling is not simply the mirror image of buying a stock.

A Useful Investor Lesson From Howard Marks

Howard Marks has repeatedly emphasized the danger of assuming that unusual circumstances automatically justify a different valuation framework.

A related investing maxim, famously associated with John Templeton, is:

"The four most dangerous words in investing are: this time it's different."

John Templeton

The phrase is relevant here because SpaceX really was different in several respects.

It had businesses in multiple industries.

It was growing Starlink rapidly.

It had an enormous potential market.

It had a powerful public brand.

It combined space infrastructure with AI.

It also had massive future capital requirements and a valuation that looked extreme under traditional metrics.

The challenge is that "different" does not tell you whether the stock should rise or fall tomorrow.

That is a separate question.

And that distinction is critical when evaluating a short.

The ETF Effect Did Not Make the IPO Price Automatically Fake

There is another subtle point worth making.

It would be tempting to explain SpaceX's initial surge entirely through passive ETF buying.

But the timeline does not support that conclusion.

SpaceX's IPO happened on June 12.

Its Nasdaq-100 inclusion began on July 7.

Therefore, the mechanical Nasdaq-100 buying was not the direct cause of the initial June 12 opening jump.

The stock opened at $150 because of the supply and demand conditions surrounding the IPO itself.

Institutional demand, retail demand, limited float, expectations and the auction process around the opening all mattered.

The later index inclusion added another layer of demand.

This distinction is important because investors often confuse:

"Index inclusion created additional demand"

with:

"Index inclusion caused the IPO to rise."

Those are not the same claim.

What Actually Happened to Short Sellers?

The answer is fascinating because different short sellers experienced completely different outcomes.

Those who somehow shorted immediately around $150 had to survive an enormous rally.

Those who shorted after the rally toward $200 and above faced a very different setup.

Those who entered after borrow availability improved had access to a more established lending market.

And those who exited during the decline could capture substantial gross profits.

Reuters documented estimated $15.5 billion of paper profits among SpaceX short sellers by July 23.

But those aggregate figures do not mean every short seller made money.

The data represent a large group of positions with different entry points, sizes and holding periods.

Some were losing while others were winning.

That is precisely why aggregate short seller profits should never be interpreted as proof that an individual could have replicated the trade.

The Final Verdict on the Trade

The SpaceX short thesis had three ingredients that made it intellectually attractive.

First, valuation was extraordinary.

Second, the stock showed extreme volatility.

Third, the business had several major areas where investors could legitimately disagree about future profitability and capital requirements.

However, the trading reality was much harder than the valuation argument.

A short at the $150 opening price would have been under enormous pressure because the stock reached $225.64 almost immediately.

A short that survived the rally and captured the later decline could have generated very large returns.

And by September 21, the stock was around $152.44, which means that a simple short opened at $150 and held until that date would have been slightly unprofitable before costs.

The biggest misconception is therefore not about SpaceX's valuation.

It is about timing.

Being right about a stock eventually falling is not enough.

You must also be right about when to enter, survive the adverse movement, maintain borrow and meet margin requirements.

In SpaceX's case, that distinction was worth billions of dollars.

FAQ: SpaceX IPO and Short Selling

Conclusion

The most interesting lesson from the SpaceX IPO is not whether the company was "overvalued."

It is that valuation and trading are two different problems.

A stock can look extremely expensive and still rise another 50%.

A company can eventually decline and still destroy a short seller's account before the decline begins.

SpaceX went from a $135 IPO price to a $150 opening, then to a $225.64 post IPO high, followed by a collapse to $104.83 before recovering to roughly $152.44 by September 21.

That single sequence contains almost every major risk associated with short selling.

• Momentum.
• Limited float.
• Index demand.
• Borrow availability.
• Short interest.
• Margin.
• Short squeezes.
• And, ultimately, valuation.

The hypothetical SpaceX short was therefore not a simple "yes" or "no."

The mathematical result depended on entry and exit.

The practical result depended on whether the trader could actually borrow the shares.

And the historical result shows that short sellers eventually did gain meaningful exposure and, as the stock fell, accumulated billions of dollars in estimated paper profits.

For investors studying IPOs, this may be the most important takeaway of all:

This article is for educational purposes only and does not constitute financial advice. Short selling involves substantial risk, including losses that can exceed your initial investment. Always do your own research before investing.