SpaceX shares fell to a record low of $115.26 on Wednesday, as short sellers amassed $15.5 billion in paper profits, while Tesla’s stock plunge cost Elon Musk $18 billion, marking a sharp downturn for his two flagship companies.
SpaceX’s stock plunged to a record low of $115.26 on Wednesday, as short sellers accumulated $15.5 billion in unrealized gains, according to Reuters. The decline followed the rocket company’s mid-June initial public offering, which priced shares at $135 but saw them slip below that level amid growing skepticism about its valuation. About 56% of SpaceX’s free float was shorted, with analytics firm Ortex reporting that there is no sign of short sellers taking profits
and if anything they are leaning in harder,
said co-founder Peter Hillerberg.
Short Sellers Profit as SpaceX Shares Plummet
SpaceX’s stock volatility has made it a prime target for short sellers, who bet against the company’s lofty valuation. The shares dropped to a new low of $115.26 on Wednesday, after initially rising to a post-IPO high of $225.64. Short sellers, who borrow shares to sell them and buy back later at a lower price, have maintained their bets despite the risk. The survival probability of firms who maintain a significant short position in SpaceX over time is very low,
SpaceX CEO Elon Musk wrote on a post on X on Friday, highlighting the precariousness of such wagers.
The weakness in SpaceX shares reflects in part investor concern over debt-funded AI spending. Tesla, another Musk company, reported negative free cash flow in the second quarter for the first time in more than two years as the EV maker accelerated spending on AI infrastructure, battery capacity, robotaxis and next-generation manufacturing. This financial strain has spilled over into Musk’s personal wealth, which has fallen more than $700 billion from its peak, which came shortly after SpaceX’s IPO.
Tesla’s Earnings Miss Expectations
Tesla’s quarterly earnings report on Wednesday disappointed investors, with revenue of $28.2 billion beating consensus analyst estimates of $27.2 billion, while posting earnings that fell well below projections of 55 cents at 33 cents. The automaker’s stock plunged 14.1% as of Thursday afternoon, pacing what would be the largest single-day decline for the stock since June 5, 2025 (14.2%). This selloff lowered Musk’s net worth by $18.6 billion to $731.7 billion, though he remains the world’s richest person ahead of Google co-founder Larry Page ($263.8 billion) and Amazon’s Jeff Bezos ($245.4 billion).
Morgan Stanley analysts said in a note that while Tesla’s spending is a “necessary investment,” the company will need to present “tangible” milestones for its robotaxi and Optimus programs. Canaccord Genuity echoed this sentiment, writing the firm wanted to see meaningful robotaxi deployments over the next six months as Tesla ramped up its AI strategy. Musk, during the earnings call, deflected questions about a potential merger between Tesla and SpaceX, stating, We can’t talk about, you know, combining companies and that kind of thing on an earnings call—it has got to be done with the appropriate process.
Musk’s Net Worth Plummets
Musk’s net worth has fallen more than $700 billion from its peak, which came shortly after SpaceX’s IPO. A trading debut for his SpaceX made him a trillionaire, and surging shares in the rocket maker boosted him to a high of $1.45 trillion before a weekslong selloff that has since pushed his net worth below pre-IPO levels. The latest dip in Tesla shares followed speculation from shareholders about whether Musk would reveal updates for Tesla’s Optimus robotics or robotaxi plans, with submitted questions ahead of the automaker’s earnings asking why its robotaxi business had been “stalled.” Another question posed: What is keeping Tesla back from accomplishing these short-term goals that they’ve set for themselves?
Despite the setbacks, Musk remains a dominant figure in tech and space exploration. However, the combined pressure on SpaceX and Tesla has raised questions about the sustainability of his aggressive expansion plans. SpaceX will launch its 13th test flight of the Starship rocket on Thursday, its first since the rocket maker’s initial public offering last month. An earlier launch scheduled for last week was aborted after Musk said some of the rocket’s engines failed to start, which pushed SpaceX shares down by more than 4%, lowering Musk’s net worth by more than $45 billion.
What’s Next for Musk’s Companies?
The coming weeks will test the resilience of Musk’s ventures. SpaceX’s Starship program faces scrutiny as it aims to advance its lunar and Mars ambitions, while Tesla struggles to deliver on its AI and robotics promises. Analysts are watching closely for signs of stabilization in both companies’ stock prices and operational performance.
For now, the market’s skepticism underscores the challenges of scaling high-risk, high-reward enterprises. As Musk navigates these pressures, the interplay between his companies’ financial health and public perception will remain a critical factor in shaping their future trajectories.
Reuters reported SpaceX’s stock decline and short seller activity, while Forbes detailed Tesla’s earnings miss and Musk’s net worth impact.
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