SpaceX's IPO is reshaping the space trade, with S3 Partners saying investors no longer need public "proxy" stocks to gain exposure to the sector.
- S3 identified ASTS and SPCE as the sector's clearest directional short bets.
- LUNR remains heavily shorted, but long investors are buying faster, with passive ownership up 101% year-to-date.
- Meanwhile, RKLB and VSAT have seen shorts retreat, with short interest down 22% and 26% year-to-date respectively.
SpaceX's (SPCX) blockbuster IPO is doing more than minting Elon Musk as the world's first trillionaire — it's exposing where Wall Street's biggest bearish bets are concentrated in the space sector, with AST SpaceMobile (ASTS) and Virgin Galactic (SPCE) emerging as the highest-conviction short trades.
SPCX stock has jumped 50% since its $135 IPO debut, briefly overtaking Microsoft and surpassing Amazon by market cap.
ASTS, SPCE Emerge As Top Bearish Space Bets
According to S3 Partners, SpaceX's long-awaited listing removes a key dynamic that had shaped space investing for years. "SpaceX's record IPO removes the central constraint of the 'space trade' — for years it meant buying public proxies because the category leader wasn't listed," the firm said.
With SPCX now publicly traded and borrowing costs estimated at just 1%-3% annually, investors no longer need to rely on smaller space stocks to gain or hedge exposure to the sector.
"Short interest sorts by business maturity, not the 'space' label," the firm said, noting that pre-revenue and milestone-dependent companies such as ASTS, SPCE and Intuitive Machines (LUNR) carry some of the sector's highest short-interest levels. ASTS currently has about 54 million shares sold short, up 41% year-to-date, while SPCE's short position has surged 86% to 28 million shares.
Notably, S3 identified both as among the sector's clearest outright bearish trades. "At the genuinely directional shorts — AST SpaceMobile's +41% build and Virgin Galactic's +86% — the short side outran the long," the report said. S3 estimates only about 22% of ASTS short interest related to convertible-bond arbitrage strategies.
RKLB, VSAT Shorts Retreat As Fundamentals Improve
While Intuitive Machines (LUNR) remains heavily shorted with 35 million shares sold short, bullish investors have been buying faster than bears. Passive ownership has surged 101% year-to-date, while active and hedge fund long positions have risen 52% and 97%, respectively, outpacing the stock's 34% increase in short interest. "Intuitive Machines is the clearest case: every long cohort grew faster than its +34% short build YTD," S3 said.
Meanwhile, Rocket Lab (RKLB) and Viasat (VSAT) both saw shorts reduce positions over the past year as investors rewarded stronger operating fundamentals. "Rocket Lab and Viasat, the cash-generating operators, ran the other way: shorts covered both over the past month and YTD," S3 said. Short interest declined 22% year-to-date in RKLB and 26% in VSAT, even as passive ownership held steady or increased.
"Shorts are building, but passive longs are buying faster — the bears keep getting absorbed," S3 said. That trend is especially visible in stocks such as LUNR and Planet Labs (PL), where long ownership has continued to outpace short growth.
How Do Retail Traders Feel About Space Stocks?
On Stocktwits, retail sentiment was 'bullish' on SPCX amid 'extremely high' message volume, while ASTS, SPCE and RKLB were 'bullish' amid 'high' message volume, VSAT and PL were 'bearish' amid 'high' message volume, and LUNR was 'neutral' amid 'high' message volume.
Over the past year, PL has surged 428%, VSAT has gained 377%, RKLB is up 294%, LUNR has climbed 116%, ASTS has advanced 96%, and SPCE has risen 9%.
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