Seems odd that they don't discuss a common reason to short a stock: you expect it to go down, without any real opinion on the business. In this case there is going to be a ton of new float fairly soon. It's a pretty safe bet that this will depress the price. So the natural trade is to sell now (short), and buy later (cover the short). That effectively moves the future price drop to "now", which is likely what we see. This is just one way (of many) in which the market factors future events into today's price, which is sort of the whole point.
I give you a common reason to short it: you had a 5% of the company float IPO, in a few months you will have 40% of the company or more on the public market . Not to mention the “special” changes to index funds etc just to keep its valuation high (some would say artificially). On top of that the valuation metric for its stock price are not earth-ish…
Matt Levine pointed out to a likely culprit, and it indeed has nothing to do with the business outlooks.[0]
SpaceX sold only 5% of their stock in the IPO. Earliest lockups will start to [partially] expire in mid-August, bringing in further 7% of SpaceX stock to market. If you expect the market to be flooded with >2x volume of supply, you can either sell right now before the price drops even further or hold and wait for the business fundamentals catch up with pricing expectations.
Weeks is an enormous amount of time now actually. The majority of plays in what people do with stocks is actually very short term. People aren't the kind of Berkshire buy and hold-ers anymore.
If you look it up 60% of options volumes on the S&P 500 is 0 days to expiry. Literally gambling if it goes up and down this day.
Btw its not just the US that's like this. South Koreas 2x single stock ETF debacle and India's Janestreet options story are somehow even more degenerate.
On one hand, I sense that the same people who were in the shorts crowd of the Tesla 'boom or bust' Model 3 era ($TSLQQ) are now piling up against SPCX (e.g. Ed Zitron). Betting again Elon is very risky. And on the other, boy that huge valuation is scary.
The situation could be that there are two intertwined bubbles: an AI-tech-bubble and AI-financial-bubble, both at the same time and only one of them is going to really burst and affect valuations. If that happens, we can only guess the period of time it takes for the S&P 500 to recover.
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[ 2.8 ms ] story [ 33.2 ms ] threadThe reverse is true for meme stocks as well. You can buy a stock because you expect it to go up without any real opinion on the business.
Though we all know the opinion on the business. Great science project, bad business.
SpaceX sold only 5% of their stock in the IPO. Earliest lockups will start to [partially] expire in mid-August, bringing in further 7% of SpaceX stock to market. If you expect the market to be flooded with >2x volume of supply, you can either sell right now before the price drops even further or hold and wait for the business fundamentals catch up with pricing expectations.
0: https://bloom.bg/4f7pFnd
Weeks is an enormous amount of time now actually. The majority of plays in what people do with stocks is actually very short term. People aren't the kind of Berkshire buy and hold-ers anymore.
If you look it up 60% of options volumes on the S&P 500 is 0 days to expiry. Literally gambling if it goes up and down this day.
Btw its not just the US that's like this. South Koreas 2x single stock ETF debacle and India's Janestreet options story are somehow even more degenerate.
The situation could be that there are two intertwined bubbles: an AI-tech-bubble and AI-financial-bubble, both at the same time and only one of them is going to really burst and affect valuations. If that happens, we can only guess the period of time it takes for the S&P 500 to recover.
SPCX is now Wall Street's most shorted new stock
https://news.ycombinator.com/item?id=48938001
Short sellers notch $8.7B profit as SpaceX shares dip to IPO price
https://news.ycombinator.com/item?id=48948435