Third Discussion on Shorting SpaceX! Five Solid Proofs of the Company's Valuation Bubble Bursting!

SpaceX has been listed for just five weeks, yet its stock price has plunged from the heights into the abyss.On July 18, SpaceX closed down 5.43%, briefly dropping as much as 6.9% during trading to $122.12 per share, with a market cap falling to $1.61 trillion. Compared to the post-IPO peak of $2.64 trillion at market close on June 16,its market value has shrunk by more than $1 trillion.The 13th test flight of Starship was automatically aborted at the last second before launch due to an engine failure, becoming the final straw that broke the share price—but this is far from the end of the story. On July 9, we explained the core logic of shorting SpaceX in our first article:Starlight Falling: The Five Core Logics of Shorting SpaceX!In our second article, Shorting SpaceX Again: The Inevitable Path of Valuation Correction!we detailed the path of valuation regression, as SpaceX is moving towards valuation normalization.Today, we systematically elaborate the core logic of shorting SpaceX again, considering five aspects: valuation, financials, technology, share unlocks, and competition.

I. Valuation Bubble: A Castle in the Air with a 49x Price-Sales Ratio

At IPO pricing of $135 per share, SpaceX’s price-to-sales ratio was already above 90 times; at its $225.64 high, valuation peaked at about 140 times. Even after a major correction, its forward P/S ratio remains high at 49 times. By comparison, Tesla’s price-to-sales ratio is about 15, with most big tech stocks lower still.

The Financial Times once pointedly noted: At a $1.75 trillion valuation, SpaceX would be the seventh-largest public company in the US; yet with just $19 billion in annual revenue, it would rank about 200th, on a par with General Mills, maker of "Lucky Charms" cereal.

Wall Street’s “Big Short” Michael Burry bluntly stated SpaceX “isn’t even worth $1 trillion.” Veteran investor George Noble, who worked with Peter Lynch at Fidelity, was more direct, arguing SpaceX's fair value is only about $30 a share—implying the current price still has roughly 75% downside.

When a company’s valuation relies on a perfect narrative for decades into the future, any disturbance could trigger an avalanche.

II. Financial Bleeding: Burning a Unicorn Every Quarter

SpaceX’s financials starkly contrast with its lofty valuation.

For the full year 2025, SpaceX’s operating revenue was $18.7 billion, with a net loss of $4.9 billion. In 2026, things deteriorated rapidly—Q1 revenue was less than $4.7 billion, with revenue growth dropping from 33% in 2025 to just 15.4%, and a single-quarter net loss of $4.276 billion, virtually matching the entire loss for 2025.

Even more shocking, the downward trend continued in Q2. SpaceX reported a net loss of $4.28 billion in Q2 2026, with revenue of $4.7 billion. In the first half of the year, cumulative losses surpass $8.5 billion, while annualized revenue is less than $19 billion—this means SpaceX loses more than $0.45 for every $1 earned.

The only profit pillar, Starlink, is having its profits eroded by the Starship rocket development and xAI artificial intelligence operations. In 2025 alone, the AI division lost $6.4 billion; cumulative investment in the Starship project has exceeded $15 billion. The prospectus openly admits the company “has a history of net losses and may not achieve profitability in the future.”

What’s more alarming is the debt situation. SpaceX is highly reliant on debt financing to fund AI infrastructure investments, heightening market concerns about its repayment capability.

How can a company losing $42 billion a quarter and surviving on borrowed funds justify a $1.6 trillion valuation?

III. Technological Myth Fades: Starship Fails Repeatedly

Starship is the central pillar of SpaceX's valuation story—without Starship’s reusability, space data centers, Mars migration, and Starlink V3 deployments are but empty promises.

Yet, on July 16, the 13th Starship test flight was automatically aborted at the last second before ignition due to “some engines failing to start”. This was the first Starship test after SpaceX’s IPO, coinciding with a period of stock price pressure and a record-high short interest among newly public companies. Musk stated two Raptor engines will be replaced, with the next launch as early as next week.

This is not an isolated case. The 12th Starship test also saw a countdown pause and was aborted seconds before launch. While Raymond James analysts admit “such anomalies will be inherent to Starship’s aggressive development path,”RBC analysts also warn that the rhythm of rapid reusability is “critical,” and the risk reduction path is “not linear”.

Joe Gilbert, portfolio manager at Integrity Asset Management, commented frankly: “The timing of a launch failure is not ideal from a narrative perspective… Investors are reducing position risks and reassessing valuation, and market optimism is slowly fading.”

For a company whose valuation is built on ‘future technological breakthroughs’, each technical delay further erodes market confidence.

IV. Wave of Share Unlocks: Imminent Supply Shock

This is the most direct catalyst for shorting SpaceX.

When SpaceX went public, less than 5% of its shares were actually tradable. Rapid inclusion in the Nasdaq 100 forced passive funds to buy in, artificially creating a brief boom. Now, that game is reversing.

According to the lockup schedule, insider shares will be unlocked in batches—starting after the Q2 earnings release and continuing through the year’s end. In the first unlock, regular employees and some early investors can sell 911.5 million shares on the second trading day after the first quarterly earnings report. At current prices, this batch of sellable shares is worth about $123 billion, exceeding the current free-float market cap of about $86 billion.

Overall, by December 8, the proportion of publicly tradable shares of SpaceX will rise to 40% of total shares. Noble warns that by early September, insiders may sell as much as 44% of the company, sending free-floats surging by around 900%.

These shares were purchased at extremely low prices, so there is strong incentive for profit-taking. When supply skyrockets by nine times and demand keeps fading, the stock’s decline is almost mathematically certain.

Short sellers are voting with their feet. According to S3 Partners, about 185 million SpaceX shares are currently sold short, about 29% of the public float, with short interest totaling about $25 billion. Three weeks ago, this figure was just 5%–7% of tradable shares. The short position has increased several times over just a few weeks, with short sellers now having nearly $4 billion in floating profits.

Mark Malek, CIO of Siebert Financial, put it bluntly: “Many investors may have already reevaluated their original logic, while previously hesitant potential investors are waiting for lower entry points.”

V. Intensifying Competition: The Moat Is Narrowing

SpaceX's valuation is built on the assumption that it will maintain monopoly in the space sector long term. But this assumption is being challenged.

Jeff Bezos’ Blue Origin is launching its first external financing since inception, aiming to raise $10 billion at a $130 billion valuation. This is the first time since 2000 that Blue Origin has brought in outside capital, led by asset manager Coatue Management, with Bezos personally investing $2 billion.

Blue Origin aims to launch an enterprise-level satellite connectivity service called TeraWave, directly competing with SpaceX's Starlink. Since 2008, SpaceX has received about $15.7 billion in government contracts, Blue Origin just $2.9 billion—but this gap is narrowing. The Pentagon has added Impulse Space and Relativity Federal to the roster of national security launch bidders.

Although SpaceX’s moat is deep, it is far from insurmountable. As competitors catch up with lower capital costs, the high valuation narrative will face ever greater pressure.

Conclusion: Bursting the Bubble Is Only a Matter of Time

Senior market analyst Daniela Hathorn summed it up best: SpaceX’s stock slide is the result of “profit-taking, revaluation of expectations, and the fading of previously extreme bullish positioning.”.

SpaceX is an awe-inspiring technology company—there is no doubt about that. The engineering behind Starship, the commercial expansion of Starlink, and the technological leadership in rocket recovery are all admirable. But great technology and a rational share price are two different things.

When a company trades at 49x sales, loses over $8.5 billion in six months, suffers repeated rocket delays, faces massive share unlocks, and is being pursued by rejuvenated competitors, the short thesis is robust. Of 32 analysts, 27 rate the stock a “buy”, showing clearly: the greater the market consensus, the wider the expectation gap for surprise.

The laws of the Capital market never change:a valuation divorced from fundamentals will eventually return to Earth’s gravity.

Shorting SpaceX is not a denial of its technological achievements, but a return to valuation common sense.