Elon Musk Says SpaceX Short-Sellers Have a "Very Low" Survival Probability. Is He Right?
Musk may be right, given SpaceX's existing business and future potential. There's an important qualification he added to his warning, though.
Overview
As is often the case following an initial public offering, some investors are betting that the pre-IPO hype surrounding Space Exploration Technologies (NASDAQ: SPCX) -- you know it better as SpaceX -- will continue to fade, letting the stock sink with it.
Specifically, as of the latest count, 165 million SPCX shares have been sold short. In other words, these investors have sold shares of SpaceX they don't yet own, with plans to buy them at a (hopefully) lower price in the future to profitably close out these positions.
Details
Founder and CEO Elon Musk responded, of course. In a post on his social media site X, Musk writes, "The survival probability of firms who maintain a significant short position in SpaceX over time is very low," meaning these risky trades are likely to backfire by virtue of SPCX shares rallying rather than continuing to sink. The higher SpaceX shares climb, the bigger these short-sellers' losses can get. In theory, their potential losses are infinite.
Source
Originally published at www.fool.com.