TLDRs
- Russell-linked funds could buy $2.68 billion worth of SpaceX shares.
- Short interest is rising rapidly despite strong institutional demand.
- SpaceX’s $25 billion bond issue adds significant future payment obligations.
- Investors remain divided as index inclusion and debt concerns collide.
Shares of the recently public aerospace and technology giant closed Wednesday down roughly 1% at $154.54. Despite the recent weakness, the stock remains approximately 14.5% above its initial public offering price of $135. However, the shares are still trading more than 30% below the highs reached shortly after the IPO, reflecting heightened volatility during the company’s first weeks as a publicly traded firm.
With a market capitalization exceeding $2 trillion, SpaceX now faces a crucial milestone as index-tracking funds prepare for Friday’s Russell rebalance.
Space Exploration Technologies Corp, SPCX
Massive Passive Fund Demand
Analysts at Jefferies estimate that investment funds benchmarked to Russell indexes may need to acquire roughly $2.68 billion worth of SpaceX stock during the rebalancing process. Based on current prices, that equates to approximately 17.3 million shares.
The anticipated demand stems from new FTSE Russell rules introduced earlier this year that allow large qualifying IPOs to be added to U.S. indexes shortly after they begin trading. The change has accelerated institutional ownership for newly listed mega-cap companies such as SpaceX.
Index inclusion often creates temporary buying pressure because passive funds are required to purchase shares regardless of valuation. Market participants are therefore closely watching Friday’s closing auction, when much of this activity is expected to occur.
Interactive Brokers Chief Strategist Steve Sosnick noted that trading activity surrounding SpaceX has become more balanced compared with the enthusiasm seen immediately after the IPO, suggesting investors are beginning to assess the company on longer-term fundamentals rather than pure momentum.
Bears Increase Their Bets
Even as billions of dollars in forced buying loom, bearish investors are steadily increasing positions against the stock.
Data from analytics provider Ortex shows approximately 83 million SpaceX shares have been sold short, representing nearly 13% of the company’s free float. According to those estimates, the anticipated Russell-related purchases would equal roughly 21% of all currently shorted shares.
Alternative estimates from S3 Partners place short interest lower, between 5% and 7% of available shares, highlighting uncertainty surrounding the exact scale of bearish positioning.
Nevertheless, market observers agree that short selling activity has grown unusually quickly for a company that has only been publicly traded for a matter of weeks.
Although borrowing costs remain relatively modest at around 1%, rising short interest indicates that some investors remain skeptical about SpaceX’s valuation and its ability to sustain premium pricing following its explosive market debut.
Bond Deal Draws Attention
Adding another layer to the investment debate is SpaceX’s recently completed $25 billion bond offering.
The debt issuance attracted overwhelming investor interest, generating approximately $85 billion in orders, more than three times the size of the offering. The bonds were issued across five tranches carrying coupon rates ranging from 5.35% to 6.65%.
Based on the final pricing, SpaceX will face annual interest obligations totaling roughly $1.46 billion.
While the financing allows the company to raise capital without diluting existing shareholders, investors are increasingly focused on the long-term costs associated with aggressive borrowing.
The company’s 2036 notes priced at a spread notably above comparable BBB-rated corporate debt, suggesting investors demanded additional compensation to absorb the risk.
Debt Costs Meet Market Skepticism
SpaceX disclosed that it held approximately $100.8 billion in cash when marketing the bond offering. The company also reported 2025 revenue growth of 33%, reaching $18.67 billion.
Despite strong top-line expansion, the company remains unprofitable, a factor that has contributed to investor caution. Annual interest expenses from the new bond issue represent nearly 8% of last year’s revenue, underscoring the scale of SpaceX’s financing commitments.
Broader market conditions may also complicate sentiment. Investors have recently shown a preference for companies benefiting from AI and infrastructure spending while becoming increasingly wary of firms undertaking large capital expenditures.
As SpaceX prepares to join the Nasdaq-100 in early July, traders are expected to remain focused on whether incoming index demand can offset rising short interest and concerns surrounding the company’s growing debt burden.
Friday’s Russell rebalancing could provide the first major test.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
