Why Billions Are Flowing into Short SpaceX ETFs

SpaceX's Explosive Rally Sparks Surge in Short ETF Trading

SpaceX's market debut on June 12, 2026, was nothing short of extraordinary. The company raised approximately $75 billion in what became the largest IPO in financial history, while investor demand reportedly exceeded $250 billion.¹ Within days, shares surged to $225.64 rising 67% above the IPO price of $135, briefly pushing the company's valuation beyond several established mega-cap technology companies.

Yet while the IPO was undoubtedly a success, a growing number of investors are asking a different question: has the stock moved too far, too fast? The answer to that question may explain why trading activity in the newly launched Leverage Shares -2x Short SpaceX ETF (SSPC) exploded during its first week on the market.

As bullish enthusiasm around SpaceX reached extreme levels, sophisticated investors began positioning for a pullback, pushing SSPC trading volume above $638 million in the first week since launch.²

SpaceX Has Become One of the Most Expensive Stock on Wall Street

There is little debate that SpaceX is a remarkable business. The company dominates commercial space launches, operates the world's largest satellite constellation through Starlink, and has ambitious plans to combine artificial intelligence and orbital infrastructure through its merger with xAI.³

However, even transformational companies can become overvalued. At current levels, SpaceX trades on valuation multiples rarely seen in public markets. Even after retreating to $154.60, SpaceX remains exceptionally expensive. With a market capitalisation of approximately $2.03 trillion as of June 22, 2026, and 2025 revenue of just $18.7 billion³, the company still trades at around 90 times trailing sales.

Several research firms have already expressed concerns about the valuation. Morningstar currently assigns a fair value estimate of approximately $63 per share⁴, while the broader Wall Street consensus is closer to $164⁵. Even some of the most bullish analysts struggle to justify the current valuation without assuming extraordinary growth in AI and space infrastructure over the next decade.

Such a wide divergence in analyst opinions is highly unusual and suggests that the stock remains vulnerable to sharp price corrections as investors reassess expectations.

SpaceX Is Burning Billions of Dollars

Another concern for bears is profitability. Despite its technological leadership, SpaceX remains deeply loss-making.

The company reported a net loss of approximately $4.94 billion in 2025 and a further $4.28 billion loss in its most recent quarter.³ Free cash flow also remains negative as management continues investing heavily across starship development, Starlink satellite expansion, AI infrastructure, data centres and compute clusters, and orbital AI initiatives.³

The scale of these investments means SpaceX may need additional external financing in the future, potentially through debt issuance or equity raises. While the company disclosed more than $100 billion in cash and cash equivalents as of June 19, it has already launched a senior notes offering, underscoring the capital-intensive nature of its expansion strategy.⁶

Public market investors often become less tolerant of persistent losses once the excitement surrounding an IPO fades.

xAI Could Be the Biggest Risk to SpaceX's Valuation

Much of the current valuation premium rests on SpaceX merger with xAI. Management has presented a compelling long-term vision in which global satellite connectivity, AI compute, and space infrastructure converge into a powerful ecosystem.³

While the strategic logic is certainly attractive, investors are concerned that xAI remains highly capital intensive and currently contributes to substantial cash burn.

While subscription and advertising revenues continue to grow³, the monetisation profile remains uncertain, and there is no guarantee that orbital AI infrastructure ultimately delivers the economic returns implied by today's valuation.

For investors, this creates a classic risk-reward imbalance: enormous long-term upside, but significant execution risk along the way.

Lock-Up Expirations Could Trigger Selling Pressure

Another key risk for investors is SpaceX's unusually complex lock-up schedule. Only around 4-5% of total shares were made available during the IPO^7, leaving the overwhelming majority of stock in insider and early investor hands.

This limited float has contributed significantly to the post-IPO rally by restricting supply. However, that supply constraint will gradually ease. Beginning later this summer, several lock-up periods will expire, potentially releasing billions of shares into the market over the following twelve months.⁷

SpaceX's lock-up structure is unlike that of any major IPO in history. Rather than creating one cliff-edge event, it distributes potential selling pressure across a 12-month period.⁷ History suggests investors should not ignore this risk: despite using a staggered lock-up schedule, Meta Platforms lost more than 60% of its value following its 2012 IPO before eventually recovering.⁸

Elon Musk's nearly 49% stake remains locked until June 2027.9 Although Musk has stated that he does not intend to sell shares, the eventual expiration of these restrictions could still influence institutional positioning and sentiment.

The "Musk Factor" Is Both an Opportunity and a Risk

We believe Elon Musk remains SpaceX's greatest asset. His track record of building industry-changing companies has created enormous wealth for shareholders over the past two decades.

At the same time, investors should acknowledge that SpaceX is unusually dependent on a single individual. According to the IPO prospectus, Musk retains approximately 85% voting control and continues serving in multiple leadership roles across SpaceX, Tesla, xAI, X, Neuralink and The Boring Company.³

Any operational distraction, reputational issue, regulatory dispute, or unexpected absence involving Musk could materially affect investor sentiment. For a stock trading at such elevated multiples, even small disappointments can trigger large share price moves.

Why Investors Are Using Short SpaceX ETFs

For investors who believe SpaceX could decline in the near term, directly shorting the stock may not be straightforward. Because only a small percentage of shares currently trade publicly, borrowing SpaceX stock can be difficult and expensive. In periods of heightened demand, locating shares to short may become nearly impossible.

This is precisely where the Leverage Shares -2x Short SpaceX ETF (SSPC) enters the picture. SSPC seeks to deliver twice the inverse of SpaceX's daily performance, allowing investors to potentially benefit when SpaceX shares fall.

With -2x Short SpaceX ETFs, investors can gain bearish exposure in a simple and accessible way without the operational complexities associated with short-selling a thinly traded stock.

The strong early trading activity suggests investors have quickly embraced this approach. During its first week of trading, SSPC generated substantial volume as traders positioned for a potential post-IPO pullback. The significant interest indicates that market participants are looking beyond the excitement of the IPO and focusing on valuation, fundamentals, and upcoming catalysts.

Key Catalysts Bears Are Watching

Several events could determine the next major move in SpaceX shares:

The company's first earnings release as a public company will provide investors with the first detailed look at operating performance since the IPO. Any signs of slowing Starlink growth, rising costs, or weaker-than-expected AI monetisation could pressure the stock.

As more shares become eligible for sale, supply could increase materially, potentially weighing on prices.

Competition across both satellite connectivity and launch services continues to intensify, with companies such as Amazon, Rocket Lab, and other emerging players investing aggressively.

Historically, many blockbuster IPOs experience a period of valuation compression once initial enthusiasm fades and trading becomes increasingly driven by fundamentals.

Conclusion:

SpaceX remains one of the most exciting companies ever to enter public markets. However, excitement alone rarely supports extreme valuations indefinitely. With the stock trading at extremely elevated multiples, billions of dollars in losses still being generated, and major lock-up expirations approaching, the potential for volatility remains exceptionally high.

As the public market begins separating conviction from fundamentals, downside opportunities may emerge alongside the long-term growth story.

Footnotes:

¹Yahoo Finance: SpaceX IPO investor demand reportedly tops $250 billion, as of June 11, 2026.

²Bloomberg terminal: SSPC trading data, as of 22 June 2026.

³Sec.gov: Space Exploration Technologies – S-1, 20 May 2026.

⁴Morningstar: SpaceX IPO Deep Dive: The Hype, the Price, and the Opportunity, as of June 9, 2026.

⁵Yahoo Finance: 6b Wall Street Analysts Have Issued Price Targets on SpaceX. Here’s the One I Agree With Most, as of June 18, 2026.

^6Investing.com: SpaceX slides, tech stocks dip – what’s moving markets, as of June 23, 2026.

⁷Investing.com: SpaceX Lockup Countdown: When shares May Become Safer to Buy, as of June 22, 2026.

⁸TradingView: Meta Weekly Price Chart, as of June 25, 2026.

⁹Pluang: Elon Musk agrees to lock SpaceX stock for 366 days, limiting early sales post-IPO, as of June 3, 2026.