Up 26%, SpaceX Briefly Breaks Above IPO Price. Fundamental Turnaround or Short Squeeze?

SpaceX's Q2 revenue surged 92% to $7.81 billion, beating estimates while adjusted EBITDA nearly tripled to $3.54 billion, sparking analyst upgrades.

Short interest of 219 million shares against a 640 million float is amplifying the rally as squeezed shorts scramble to cover positions.

SpaceX spent $18.37 billion on capex in Q2, a figure nearly 2.4 times its revenue, which has split analyst price targets between $75 and $160.

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Mega IPOs have a well-documented habit of disappointing early investors. Data from Jay Ritter at the University of Florida shows newly public companies typically underperform the broader market by double digits in their first year of trading. SpaceX's (NASDAQ:SPCX) debut has followed that script almost to the letter -- just compressed into two months instead of twelve.

SpaceX priced its June 12 offering at $135 a share, valuing the rocket-and-satellite company at roughly $1.77 trillion in the largest IPO in history. Shares opened around $150, ran as high as the low $200s within days, then spent the next several weeks giving nearly all of that back. By early August, SpaceX had bottomed at $104.83 -- a decline of more than 50% from its peak.

Now the stock is moving again, up 26% off that low and briefly trading above its $135 IPO price this morning before slipping back to around $133 by noon. The question worth asking isn't whether the rally is real. It's what's driving it.

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Earnings were what kicked this off. SpaceX's first quarterly report as a public company showed revenue of $7.81 billion, up 92% year over year and well ahead of the $6.93 billion analysts had modeled. Net loss narrowed to $541 million from $1.008 billion a year earlier, and adjusted EBITDA nearly tripled to $3.54 billion. Argus Research upgraded the stock to buy with a $160 price target on the back of it, while Morgan Stanley's Adam Jonas called it a potential generational compounder that could nearly triple by mid-2027, tying his case to Starlink, AI compute, and launch services.

That's a legitimate operating story. But it's not the whole story.

Short interest in SPCX stood at 219.3 million shares as of July 29, according to S3 Partners data cited by Bloomberg -- a stake that dwarfs the short position in Tesla (NASDAQ:TSLA), Elon Musk's other public company. Against a float that was only around 640 million shares before this week, that's a meaningfully crowded trade. Days-to-cover on SPCX has hovered around one day, well below the threshold of seven days that traders typically flag as a squeeze risk. Low days-to-cover with high short interest is exactly the combination that lets a rally feed on itself, since shorts scrambling to close positions become forced buyers.

Complicating things further, roughly $100 billion in insider shares became eligible for trading around August 6 under SpaceX's staggered lockup schedule, with as much as $800 billion in unlocking through October. That's normally a bearish setup -- more supply typically pressures price. Instead, the stock has climbed through it, which tells you demand from both retail buyers and short-covering has been strong enough to absorb the unlock so far.

Granted, the fundamentals aren't clean. SpaceX spent $18.37 billion on capital expenditures in the second quarter -- nearly double the $10.1 billion spent in Q1 -- with $15.83 billion of that directed at AI infrastructure. That's 2.4 times the revenue the company generated in the same period.

Phillip Capital set a $75 price target with a sell rating, citing that spending pace. Management has been candid that it isn't optimizing for quarterly results; putting people on Mars is a decade-plus project, and the company has said explicitly that near-term volatility isn't the metric it's managing to.

In short, this rally looks like both stories at once: real revenue acceleration meeting a short base that's dangerously exposed. Shareholders who buy here are betting on 10-year tailwinds -- Starlink, space-based data centers, AI compute -- while accepting that capex will likely stay elevated and losses won't disappear soon. That's a reasonable trade for patient investors. It's a risky one for anyone expecting a straight line from $133 to the moon.

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