6 ms·

Traders are increasingly betting against SpaceX just weeks after IPO

55 points by ethanhawksley 2mo ago

ethanhawksley 2mo ago
https://archive.is/uVXbr https://archive.is/uVXbr
- tronfx6969 2mo ago
  ggwp
lokar 2mo ago
Seems odd that they don't discuss a common reason to short a stock: you expect it to go down, without any real opinion on the business. In this case there is going to be a ton of new float fairly soon. It's a pretty safe bet that this will depress the price. So the natural trade is to sell now (short), and buy later (cover the short). That effectively moves the future price drop to "now", which is likely what we see. This is just one way (of many) in which the market factors future events into today's price, which is sort of the whole point.
- brazukadev 2mo ago
  > Seems odd that they don't discuss a common reason to short a stock this was extensively discussed BEFORE the IPO. That is why it was overpriced. > This is just one way (of many) in which the market factors future events into today's price, which is sort of the whole point. nope. the market transferred $80B to Elon Musk from the people that got scammed.
  - lokar 2mo ago
    That’s an odd non sequitur. I’m simply describing why a lot of the short positions are not from people who have any opinion on the value of the stock. They are engaged in an almost mechanical arbitrage like trade. People tend to imagine that all short sellers have some fundamental disagreement with the current value of the security, or are trying to manipulate to the value for some reason. It’s useful to understand there is a lot of volume that does not really care about the value debate one way or another.
  - rogerrogerr 2mo ago
    Musk's shares are locked up for a year.
    - brazukadev 2mo ago
      and? Are you implying that Elon doesn't own the 80B spacex got from the IPO?
      - rogerrogerr 2mo ago
        I am implying that because it is true. SpaceX owns the $80B. Elon owns stock in SpaceX. The IPO was a primary offering in which SpaceX issued new shares and received the proceeds. If Elon had personally sold shares, the prospectus would have identified him (or other selling shareholders) in a secondary offering. It doesn’t.
        brazukadev 2mo ago
        > Elon owns stock in SpaceX. He also owns SpaceX management and its assets.
- theplumber 2mo ago
  I give you a common reason to short it: you had a 5% of the company float IPO, in a few months you will have 40% of the company or more on the public market . Not to mention the “special” changes to index funds etc just to keep its valuation high (some would say artificially). On top of that the valuation metric for its stock price are not earth-ish…
- John23832 2mo ago
  > Seems odd that they don't discuss a common reason to short a stock: you expect it to go down, without any real opinion on the business. The reverse is true for meme stocks as well. You can buy a stock because you expect it to go up without any real opinion on the business. Though we all know the opinion on the business. Great science project, bad business.
  - kubb 2mo ago
    We all know that but people will attack you with „nobody can get a payload to the orbit cheaper”. Yeah, nobody can, and there’s limited need for that.
- ruidndnfjr 2mo ago
  Not to mention that folks that are ‘locked up’ probably had a bank/hedge fund engineer hedges until they can get out
- bostik 2mo ago
  Matt Levine pointed out to a likely culprit, and it indeed has nothing to do with the business outlooks.[0] SpaceX sold only 5% of their stock in the IPO. Earliest lockups will start to [partially] expire in mid-August, bringing in further 7% of SpaceX stock to market. If you expect the market to be flooded with >2x volume of supply, you can either sell right now before the price drops even further or hold and wait for the business fundamentals catch up with pricing expectations. 0: https://bloom.bg/4f7pFnd https://bloom.bg/4f7pFnd
  - rlt 2mo ago
    Yes, that’s what the parent comment meant by “there is going to be a ton of new float fairly soon”
jorgeBanana 2mo ago
They expect locked up shares to hit the market in August and tank the price
- da-x 2mo ago
  That could happen, but should also consider that it's often the case with lockups release that they do not inflict much change on the stock price, but only if there's already enough trading volume on the stock due to other market conditions.
  - tronfx6969 2mo ago
    you clearly over-analyze the problems ! The right question should be answered is: after the investor who participated in the spcx pre-sale, receive the lockup shares, what will they do ? And what makes them do that ? Under which conditions ?
- l0ng1nu5 2mo ago
  They also see one of the most ridiculously overvalued stocks of all time and want to collect easy money.
  - hdgvhicv 2mo ago
    Only if the market is rational
kingstnap 2mo ago
"Just weeks" Weeks is an enormous amount of time now actually. The majority of plays in what people do with stocks is actually very short term. People aren't the kind of Berkshire buy and hold-ers anymore. If you look it up 60% of options volumes on the S&P 500 is 0 days to expiry. Literally gambling if it goes up and down this day. Btw its not just the US that's like this. South Koreas 2x single stock ETF debacle and India's Janestreet options story are somehow even more degenerate.
- da-x 2mo ago
  And on the other hand, there's a whole movement (in niche terms, though) of people going "just add to an S&P 500 ETF for 50 years and forget about everything else".
  - mfro 2mo ago
    Would have been an amazing idea 10 years ago. Not sure anymore.
    - nh23423fefe 2mo ago
      Owning productive assets is passe?
      - mfro 2mo ago
        No, I’m just saying I don’t know if buying SPY today would be a good idea.
  - shawn_w 2mo ago
    Substitute "target date fund" for "S&P 500 ETF" and that describes most retirement accounts... Not exactly niche.
- lokar 2mo ago
  A lot of the short dated options are market makers and index arbs hedging.
deleted 2mo ago
[deleted]
da-x 2mo ago
On one hand, I sense that the same people who were in the shorts crowd of the Tesla 'boom or bust' Model 3 era ($TSLQQ) are now piling up against SPCX (e.g. Ed Zitron). Betting again Elon is very risky. And on the other, boy that huge valuation is scary. The situation could be that there are two intertwined bubbles: an AI-tech-bubble and AI-financial-bubble, both at the same time and only one of them is going to really burst and affect valuations. If that happens, we can only guess the period of time it takes for the S&P 500 to recover.
ChrisArchitect 2mo ago
[dupe] SPCX is now Wall Street's most shorted new stock https://news.ycombinator.com/item?id=48938001 https://news.ycombinator.com/item?id=48938001 Short sellers notch $8.7B profit as SpaceX shares dip to IPO price https://news.ycombinator.com/item?id=48948435 https://news.ycombinator.com/item?id=48948435

55 points by ethanhawksley 2mo ago

ethanhawksley 2mo ago

https://archive.is/uVXbr https://archive.is/uVXbr

tronfx6969 2mo ago
ggwp

lokar 2mo ago

Seems odd that they don't discuss a common reason to short a stock: you expect it to go down, without any real opinion on the business. In this case there is going to be a ton of new float fairly soon. It's a pretty safe bet that this will depress the price. So the natural trade is to sell now (short), and buy later (cover the short). That effectively moves the future price drop to "now", which is likely what we see. This is just one way (of many) in which the market factors future events into today's price, which is sort of the whole point.

brazukadev 2mo ago
> Seems odd that they don't discuss a common reason to short a stock this was extensively discussed BEFORE the IPO. That is why it was overpriced. > This is just one way (of many) in which the market factors future events into today's price, which is sort of the whole point. nope. the market transferred $80B to Elon Musk from the people that got scammed.
- lokar 2mo ago
  That’s an odd non sequitur. I’m simply describing why a lot of the short positions are not from people who have any opinion on the value of the stock. They are engaged in an almost mechanical arbitrage like trade. People tend to imagine that all short sellers have some fundamental disagreement with the current value of the security, or are trying to manipulate to the value for some reason. It’s useful to understand there is a lot of volume that does not really care about the value debate one way or another.
- rogerrogerr 2mo ago
  Musk's shares are locked up for a year.
  - brazukadev 2mo ago
    and? Are you implying that Elon doesn't own the 80B spacex got from the IPO?
    - rogerrogerr 2mo ago
      I am implying that because it is true. SpaceX owns the $80B. Elon owns stock in SpaceX. The IPO was a primary offering in which SpaceX issued new shares and received the proceeds. If Elon had personally sold shares, the prospectus would have identified him (or other selling shareholders) in a secondary offering. It doesn’t.
      - brazukadev 2mo ago
        > Elon owns stock in SpaceX. He also owns SpaceX management and its assets.
theplumber 2mo ago
I give you a common reason to short it: you had a 5% of the company float IPO, in a few months you will have 40% of the company or more on the public market . Not to mention the “special” changes to index funds etc just to keep its valuation high (some would say artificially). On top of that the valuation metric for its stock price are not earth-ish…
John23832 2mo ago
> Seems odd that they don't discuss a common reason to short a stock: you expect it to go down, without any real opinion on the business. The reverse is true for meme stocks as well. You can buy a stock because you expect it to go up without any real opinion on the business. Though we all know the opinion on the business. Great science project, bad business.
- kubb 2mo ago
  We all know that but people will attack you with „nobody can get a payload to the orbit cheaper”. Yeah, nobody can, and there’s limited need for that.
ruidndnfjr 2mo ago
Not to mention that folks that are ‘locked up’ probably had a bank/hedge fund engineer hedges until they can get out
bostik 2mo ago
Matt Levine pointed out to a likely culprit, and it indeed has nothing to do with the business outlooks.[0] SpaceX sold only 5% of their stock in the IPO. Earliest lockups will start to [partially] expire in mid-August, bringing in further 7% of SpaceX stock to market. If you expect the market to be flooded with >2x volume of supply, you can either sell right now before the price drops even further or hold and wait for the business fundamentals catch up with pricing expectations. 0: https://bloom.bg/4f7pFnd https://bloom.bg/4f7pFnd
- rlt 2mo ago
  Yes, that’s what the parent comment meant by “there is going to be a ton of new float fairly soon”

jorgeBanana 2mo ago

They expect locked up shares to hit the market in August and tank the price

da-x 2mo ago
That could happen, but should also consider that it's often the case with lockups release that they do not inflict much change on the stock price, but only if there's already enough trading volume on the stock due to other market conditions.
- tronfx6969 2mo ago
  you clearly over-analyze the problems ! The right question should be answered is: after the investor who participated in the spcx pre-sale, receive the lockup shares, what will they do ? And what makes them do that ? Under which conditions ?
l0ng1nu5 2mo ago
They also see one of the most ridiculously overvalued stocks of all time and want to collect easy money.
- hdgvhicv 2mo ago
  Only if the market is rational

kingstnap 2mo ago

"Just weeks" Weeks is an enormous amount of time now actually. The majority of plays in what people do with stocks is actually very short term. People aren't the kind of Berkshire buy and hold-ers anymore. If you look it up 60% of options volumes on the S&P 500 is 0 days to expiry. Literally gambling if it goes up and down this day. Btw its not just the US that's like this. South Koreas 2x single stock ETF debacle and India's Janestreet options story are somehow even more degenerate.

da-x 2mo ago
And on the other hand, there's a whole movement (in niche terms, though) of people going "just add to an S&P 500 ETF for 50 years and forget about everything else".
- mfro 2mo ago
  Would have been an amazing idea 10 years ago. Not sure anymore.
  - nh23423fefe 2mo ago
    Owning productive assets is passe?
    - mfro 2mo ago
      No, I’m just saying I don’t know if buying SPY today would be a good idea.
- shawn_w 2mo ago
  Substitute "target date fund" for "S&P 500 ETF" and that describes most retirement accounts... Not exactly niche.
lokar 2mo ago
A lot of the short dated options are market makers and index arbs hedging.

deleted 2mo ago

[deleted]

da-x 2mo ago

On one hand, I sense that the same people who were in the shorts crowd of the Tesla 'boom or bust' Model 3 era ($TSLQQ) are now piling up against SPCX (e.g. Ed Zitron). Betting again Elon is very risky. And on the other, boy that huge valuation is scary. The situation could be that there are two intertwined bubbles: an AI-tech-bubble and AI-financial-bubble, both at the same time and only one of them is going to really burst and affect valuations. If that happens, we can only guess the period of time it takes for the S&P 500 to recover.

ChrisArchitect 2mo ago

[dupe] SPCX is now Wall Street's most shorted new stock https://news.ycombinator.com/item?id=48938001 https://news.ycombinator.com/item?id=48938001 Short sellers notch $8.7B profit as SpaceX shares dip to IPO price https://news.ycombinator.com/item?id=48948435 https://news.ycombinator.com/item?id=48948435