SpaceX's IPO debut at $135 has exposed concentrated bearish bets in the space sector, with AST SpaceMobile and Virgin Galactic emerging as the highest-conviction short trades according to S3 Partners analysis. The listing removes the constraint that previously forced investors to use smaller public space stocks as proxies for sector exposure. S3 Partners identified ASTS and SPCE as the sector's clearest directional short bets, with ASTS short interest up 41% year-to-date to 54 million shares and SPCE short positions surging 86% to 28 million shares, while established operators Rocket Lab and Viasat saw shorts retreat 22% and 26% respectively year-to-date.
ASTS and SPCE Short Interest Surges Year-to-Date
SpaceX stock has jumped 50% since its IPO debut, briefly overtaking Microsoft and surpassing Amazon by market cap. According to S3 Partners, the listing removes a key dynamic that had shaped space investing for years. "SpaceX's record IPO removes the central constraint of the 'space trade' --- for years it meant buying public proxies because the category leader wasn't listed," the firm said.
With SpaceX now publicly traded and borrowing costs estimated at 1%-3% annually, investors no longer need to rely on smaller space stocks to gain or hedge exposure to the sector. "Short interest sorts by business maturity, not the 'space' label," the firm said, noting that pre-revenue and milestone-dependent companies such as ASTS, SPCE and Intuitive Machines carry some of the sector's highest short-interest levels.
ASTS currently has about 54 million shares sold short, up 41% year-to-date, while SPCE's short position has surged 86% to 28 million shares. S3 identified both as among the sector's clearest outright bearish trades. "At the genuinely directional shorts --- AST SpaceMobile's +41% build and Virgin Galactic's +86% --- the short side outran the long," the report said. S3 estimates only about 22% of ASTS short interest related to convertible-bond arbitrage strategies.
RKLB and VSAT See Short Interest Decline
Intuitive Machines remains heavily shorted with 35 million shares sold short, but bullish investors have been buying faster than bears. Passive ownership has surged 101% year-to-date, while active and hedge fund long positions have risen 52% and 97% respectively, outpacing the stock's 34% increase in short interest. "Intuitive Machines is the clearest case: every long cohort grew faster than its +34% short build YTD," S3 said.
Rocket Lab and Viasat both saw shorts reduce positions over the past year as investors rewarded stronger operating fundamentals. "Rocket Lab and Viasat, the cash-generating operators, ran the other way: shorts covered both over the past month and YTD," S3 said. Short interest declined 22% year-to-date in RKLB and 26% in VSAT, even as passive ownership held steady or increased.
"Shorts are building, but passive longs are buying faster --- the bears keep getting absorbed," S3 said. That trend is especially visible in stocks such as LUNR and Planet Labs, where long ownership has continued to outpace short growth.
Retail Sentiment Turns Bullish on SPCX and ASTS
On Stocktwits, retail sentiment was 'bullish' on SPCX amid 'extremely high' message volume, while ASTS, SPCE and RKLB were 'bullish' amid 'high' message volume. VSAT and PL were 'bearish' amid 'high' message volume, and LUNR was 'neutral' amid 'high' message volume.
Over the past year, PL has surged 428%, VSAT has gained 377%, RKLB is up 294%, LUNR has climbed 116%, ASTS has advanced 96%, and SPCE has risen 9%.
FAQ
How did SpaceX's IPO affect space sector short positions?
SpaceX's IPO at $135 removed the need for investors to use smaller public space stocks as proxies, with S3 Partners reporting that ASTS short interest increased 41% year-to-date to 54 million shares and SPCE short positions surged 86% to 28 million shares. Borrowing costs for SpaceX are estimated at 1%-3% annually.
Which space stocks saw shorts retreat year-to-date?
Rocket Lab and Viasat saw short interest decline 22% and 26% respectively year-to-date, according to S3 Partners. The firm attributed the reduction to stronger operating fundamentals, describing both as "cash-generating operators" where shorts covered positions over the past month and year-to-date.
What is retail sentiment on space stocks according to Stocktwits?
Stocktwits reported 'bullish' retail sentiment on SPCX amid 'extremely high' message volume, with ASTS, SPCE and RKLB also 'bullish' amid 'high' message volume. VSAT and PL were 'bearish' amid 'high' message volume, while LUNR was 'neutral' amid 'high' message volume.
