Sorta, there are no SEC requirements for lockup. It is all depends on the agreement between the IPO company and the IPO underwriters syndicate. Spotify and Slack notably skipped lockup entirely.
Goldman Sachs, Morgan Stanley, BoA, ect are the ones who set the IPO lockup terms based on their risk and exposure post IPO.
Indexes, exchanges, underwriters, ect are all private institutions who mostly can and do set their own rules.
Every single shorted stock, was purchased by someone else who is taking the long side of the trade. So there's as many people betting the stock will go up. This says more about volatility and volume of trading, than anything else.
That is true for the stocks but not options. Anyone with a brokerage account can write some calls and if they get exercised it’s up to them to find the stock to buy. Most pricing models assume the liquidity is always available but that’s not necessarily the case.
true, but the other side of that trade is almost always an options market maker who will hedge their delta by trading the underlying stock. so, yes, buying a call doesn't directly represent share ownership, but it almost always results in a commensurate share purchase. not 1:1, but reflecting the delta of the option.
> Every single shorted stock, was purchased by someone else who is taking the long side of the trade.
> So there's as many people betting the stock will go up.
The first sentence is a useful reminder, but second has a error: A single person can have multiple bets, and not all bets are the same volume.
For example, Alice has a budget of $10 and believes the coin-flip will land Heads. Alice makes a $5 wager with Bob and a $3 wager with Carol and a $2 wager with Dan. The equilibrium is in money, rather than opinion-havers.
You're absolutely correct, and I should have been more precise. The value is always identical, but the number of participants, need not be the same for each position. Mea culpa.
Given the continued downward trend, it may be the buyers may just be disagreeing on how fast it drops, not necessarily taking a long term buy and hold position. I don't know much about option pricing, but aren't put options basically betting on the spread?
That's exactly the point. The clickbait title wants you to forget that fact and draw an incorrect conclusion. It could have also been, "SPCX is the most purchased new stock", but that wouldn't have fed the desired narrative.
You're conflating two things though. Shares are being borrowed to sell in this instance, referred to as short-selling. These shares can theoretically be borrowed multiple times over to sell (ex. Gamestop fiasco). This is not current owners of the shares selling to new buyers, they are selling already-owned shares of SPCX.
It has nothing to do with the shares being borrowed. That's a separate transaction that comes with a fee. The point is that the share is then sold. It's sold to someone who is taking the long position. The original owner of the share, from whom it was borrowed, makes their money in fees, and by investing any security deposit given by the borrower. They are not taking a long or short position.
Yes, that is how short-selling works, but you're claiming that the only reason the headline isn't "SPCX is the most purchased new stock" is for narrative reasons, which is patently false. Shorting necessitates that someone decides to sell a stock they do not own, which creates downward pressure on the price. Saying "there's always someone on the other end of the transaction" is true, but not at the same price. If what you were implying were true, the price of shares would never change. You probably understand this, but share prices decrease and increase due to the number of buyers and sellers. Hence, the more people that short-sell a stock, the lower the share price goes until it can find buyers.
I never intended to imply that the law of supply and demand was nullified.
And I didn't say that the price was unaffected, just that there is as much money
thinking they're getting a valuable long term investment, as there is as money
shorting the stock.
There’s always a buyer on the other side of a short, naked or located. The question is whether the originating broker actually borrowed the shares.
They are supposed to verify that before they place the trade and generally do follow the rules. Because if they don’t, they will be not allowed to allow any short sales for that security.
They're illegal, and you can look at them just as the broker making a long bet themselves. Since they'll have to pay off the short seller, if the stock goes down.
Right now, SpaceX has provided 639 million shares to trade. People want more.
In a month, there will be 1,583 million shares to trade.
But right now, there are actually 820 million shares to trade: the 639 million provided by SpaceX, plus another 181 million provided by short sellers.
Hasn't the stock already collapsed below IPO price? Does that mean the IPO was simply overpriced? Do these people expect the stock to go down even further? Shorting is way more risky I don't see why this would be the case unless my questions turned out to be predictions.
I wouldn't say that it collapsed, it's only slightly under its IPO price, $134 vs. $135.
However it's not going up and later this month the first lockup period ends and people who got stock options are allowed to sell some of their stocks. These people don't care if the price is $134 or $135, because they go in much much lower, down to $30, from what I can tell. So starting this month there's going to be new shares available to buy, and the sellers are less critical of the price your offering.
Yes, people expect it to trade much lower, around $40 per share, still would be a huge valuation for what the company has done. Goldman Sachs analysts had an extreme range, of like $6 Billion to $5T, but the consensus $2T required 100x revenue multiple by 2030. If revenue was less than 10x by 2030 it's less than $100B company, and only $6B if it remains flat. So a lot of downsides and the upside requires a continuation of some insane magic.
True, but it's the range from different analysts. Saying "we don't know" isn't really an option. Gotta say something when your IPOing a trillion dollar company.
> "I think it could be half over the course of the year," Noble said, adding that he believes a fair value for the shares is around $30, implying a decline of roughly 78% from current levels.
A rational person isn't willing to pay more than the present value of future cash flows. Just like how a rational person wouldn't pay $101 for a $100 bill.
Where it gets fun is that: (1) we have people selling $100 bills for more than $100 and, (2) we have people gladly buying $100 bills for more than $100.
I think the pullback from the initial IPO bump was expected. I think the news here is expectations that it has a lot more downside to come.
Particularly once it gets past the lockup period. If I had to guess I say a lot of folks are thinking a lot of people will sell post lock up and they’re timing their shorts around that date.
More than half of IPOs fall below their price in the first year and AFAIK it’s something like more than half underperforming market over the first five.
Basically an IPO is a bad bet for a five year position. But SPCX is especially bad.
Over two weeks ago, calls outnumbered puts 5 to 1 according to an article by SeekingAlpha. I am wondering if this flip is too reactive. I can't discount the "Musk premium" that keeps people enamored with his securities and cause unpredictability.
It was plainly obviously fascist signalling, whether trolling, joking or serious. Nazi? The detail doesn’t matter. But he knew what that looked like and he did it deliberately. It’s just not really plausible to pretend that he he wouldn’t have known what it looked like.
I personally think he really is a fascist, but I still don't think he was deliberately throwing out a Nazi salute. Just naive about waving to a crowd in front of a camera, which is very on-brand for him.
In a few weeks the pre-ipo share owners can offload the first batch of their shares (after q2 results release)
So guessing they are shorting for this event
Typically this would be prohibited (at least as an employee)
If you have holdings that are locked up, are you allowed to short stock or use options to hedge your position?
I'm not an employee :)
Sorta, there are no SEC requirements for lockup. It is all depends on the agreement between the IPO company and the IPO underwriters syndicate. Spotify and Slack notably skipped lockup entirely.
Goldman Sachs, Morgan Stanley, BoA, ect are the ones who set the IPO lockup terms based on their risk and exposure post IPO.
Indexes, exchanges, underwriters, ect are all private institutions who mostly can and do set their own rules.
Every single shorted stock, was purchased by someone else who is taking the long side of the trade. So there's as many people betting the stock will go up. This says more about volatility and volume of trading, than anything else.
That is true for the stocks but not options. Anyone with a brokerage account can write some calls and if they get exercised it’s up to them to find the stock to buy. Most pricing models assume the liquidity is always available but that’s not necessarily the case.
true, but the other side of that trade is almost always an options market maker who will hedge their delta by trading the underlying stock. so, yes, buying a call doesn't directly represent share ownership, but it almost always results in a commensurate share purchase. not 1:1, but reflecting the delta of the option.
> Every single shorted stock, was purchased by someone else who is taking the long side of the trade.
> So there's as many people betting the stock will go up.
The first sentence is a useful reminder, but second has a error: A single person can have multiple bets, and not all bets are the same volume.
For example, Alice has a budget of $10 and believes the coin-flip will land Heads. Alice makes a $5 wager with Bob and a $3 wager with Carol and a $2 wager with Dan. The equilibrium is in money, rather than opinion-havers.
You're absolutely correct, and I should have been more precise. The value is always identical, but the number of participants, need not be the same for each position. Mea culpa.
Almost all lenders are institutional funds like Vanguard and Fidelity, also QQQ Trust,
As index funds they were forced to buy. Forced. They are not taking any view. No view.
Given the continued downward trend, it may be the buyers may just be disagreeing on how fast it drops, not necessarily taking a long term buy and hold position. I don't know much about option pricing, but aren't put options basically betting on the spread?
Regardless, you can't short anything without someone taking the opposite position. It's really independent of the overall downward trend.
This isn't saying anything, anyone selling a stock is selling to someone going long.
That's exactly the point. The clickbait title wants you to forget that fact and draw an incorrect conclusion. It could have also been, "SPCX is the most purchased new stock", but that wouldn't have fed the desired narrative.
You're conflating two things though. Shares are being borrowed to sell in this instance, referred to as short-selling. These shares can theoretically be borrowed multiple times over to sell (ex. Gamestop fiasco). This is not current owners of the shares selling to new buyers, they are selling already-owned shares of SPCX.
It has nothing to do with the shares being borrowed. That's a separate transaction that comes with a fee. The point is that the share is then sold. It's sold to someone who is taking the long position. The original owner of the share, from whom it was borrowed, makes their money in fees, and by investing any security deposit given by the borrower. They are not taking a long or short position.
Yes, that is how short-selling works, but you're claiming that the only reason the headline isn't "SPCX is the most purchased new stock" is for narrative reasons, which is patently false. Shorting necessitates that someone decides to sell a stock they do not own, which creates downward pressure on the price. Saying "there's always someone on the other end of the transaction" is true, but not at the same price. If what you were implying were true, the price of shares would never change. You probably understand this, but share prices decrease and increase due to the number of buyers and sellers. Hence, the more people that short-sell a stock, the lower the share price goes until it can find buyers.
I never intended to imply that the law of supply and demand was nullified. And I didn't say that the price was unaffected, just that there is as much money thinking they're getting a valuable long term investment, as there is as money shorting the stock.
You are assuming there are not naked shorts out there.
There’s always a buyer on the other side of a short, naked or located. The question is whether the originating broker actually borrowed the shares.
They are supposed to verify that before they place the trade and generally do follow the rules. Because if they don’t, they will be not allowed to allow any short sales for that security.
They're illegal, and you can look at them just as the broker making a long bet themselves. Since they'll have to pay off the short seller, if the stock goes down.
From Matt Levine just today...
https://www.bloomberg.com/opinion/newsletters/2026-07-16/sho...
$4T was 20% of all US currency ever printed in 2020. What makes this worth 10%? China and Japan are already catching up.
This was just a bag drop on retail and trying to force it into retirement funds proves it.
Hasn't the stock already collapsed below IPO price? Does that mean the IPO was simply overpriced? Do these people expect the stock to go down even further? Shorting is way more risky I don't see why this would be the case unless my questions turned out to be predictions.
I wouldn't say that it collapsed, it's only slightly under its IPO price, $134 vs. $135.
However it's not going up and later this month the first lockup period ends and people who got stock options are allowed to sell some of their stocks. These people don't care if the price is $134 or $135, because they go in much much lower, down to $30, from what I can tell. So starting this month there's going to be new shares available to buy, and the sellers are less critical of the price your offering.
Yes, people expect it to trade much lower, around $40 per share, still would be a huge valuation for what the company has done. Goldman Sachs analysts had an extreme range, of like $6 Billion to $5T, but the consensus $2T required 100x revenue multiple by 2030. If revenue was less than 10x by 2030 it's less than $100B company, and only $6B if it remains flat. So a lot of downsides and the upside requires a continuation of some insane magic.
> Goldman Sachs analysts had an extreme range, of like $6 Billion to $5T
What a weird way for them to say "we don't know"! It's like saying this house has 0 to 100 bathrooms.
True, but it's the range from different analysts. Saying "we don't know" isn't really an option. Gotta say something when your IPOing a trillion dollar company.
To keep the proportions correct, it's between a model house the size of a piece of paper or a normal 2-bedrooms.
"So you're saying there's a chance? It might actually be possible to have 100 bathrooms! I knew it!"
I haven't seen anything saying $40. The lowest I have seen is $70.
From TFA:
> "I think it could be half over the course of the year," Noble said, adding that he believes a fair value for the shares is around $30, implying a decline of roughly 78% from current levels.
That's an absurd valuation. Typically stocks are valued at what people are willing to pay, with earnings partially driving that value.
A rational person isn't willing to pay more than the present value of future cash flows. Just like how a rational person wouldn't pay $101 for a $100 bill.
Where it gets fun is that: (1) we have people selling $100 bills for more than $100 and, (2) we have people gladly buying $100 bills for more than $100.
I think the pullback from the initial IPO bump was expected. I think the news here is expectations that it has a lot more downside to come.
Particularly once it gets past the lockup period. If I had to guess I say a lot of folks are thinking a lot of people will sell post lock up and they’re timing their shorts around that date.
Tbh I'm no5 sure I've even seen an IPO where the price didn't collapse initially.
More than half of IPOs fall below their price in the first year and AFAIK it’s something like more than half underperforming market over the first five.
Basically an IPO is a bad bet for a five year position. But SPCX is especially bad.
JPM still thinks its a $300 stock
It is... as long as somebody else thinks so.
so does Jack Grubman, after being instructed to take a "fresh look" at it.
I just hope this doesn't destroy the company that would suck lose their edge and then China comes in
No one forced them to IPO well above the present value of their future cash flows. Or claim their TAM was $28 trillion.
Over two weeks ago, calls outnumbered puts 5 to 1 according to an article by SeekingAlpha. I am wondering if this flip is too reactive. I can't discount the "Musk premium" that keeps people enamored with his securities and cause unpredictability.
Related:
SpaceX stock erases all its gains and slides below IPO price in intraday trading
https://news.ycombinator.com/item?id=48933344
SpaceX bond worth 10% less than issue price – heading for junk bond status
https://news.ycombinator.com/item?id=48920181
There's another Starship launch today. It'll be interesting to watch the stock price react to the failures and successes of their testing campaign.
It's almost as if the market is returning a verdict on Elon's unilateral decision to burn barrels of company cash on xAI.
I would argue the current price action isn't even driven by any company decisions. The stock needs to settle for a while after IPO.
Anyone that thinks Musk approaches anything for short-term results doesn't understand Musk.
I don't think Musk understands Musk.
It must be some 5-dimensional chess he’s playing, it couldn’t be that he’s just an edgelord Nazi whose brain has been liquefied by ketamine abuse
Someone who really understood long term results wouldn’t keep repeatedly promoting absurdly short timescales for major developments.
He has a malignant narcissist’s distorted grasp of time: any future he promises is always nearer than is plausible, but the past is never finalised.
anything nonhuman*
What's the long game behind alienating well over half of Tesla's customer base by throwing Nazi salutes? How does that pay off in the end?
Under this analysis, what was the short term motive? How does that pay off?
it's so weird and kinda disturbing how many people really believe that was a Nazi salute. It's so easy shape public opinion with media and algorithms.
Same thing happening with "datacenters will destory the world because of their water use" BS
It was a Nazi salute.
It was plainly obviously fascist signalling, whether trolling, joking or serious. Nazi? The detail doesn’t matter. But he knew what that looked like and he did it deliberately. It’s just not really plausible to pretend that he he wouldn’t have known what it looked like.
I personally think he really is a fascist, but I still don't think he was deliberately throwing out a Nazi salute. Just naive about waving to a crowd in front of a camera, which is very on-brand for him.
SpaceX's core business is transferring money from believers in Elon Musk's enrichment schemes to banks and short sellers.
Not quite, it's also about transferring money to the Saudi princes who financed his buyout of Twitter.