Short Sellers Keep Piling Up Against SpaceX. Elon Musk Is Standing Defiant

Elon Musk is saying that those short-selling SpaceX stock will get burned. Responding to a social media publication noting the percentage of company shares being used for that purpose, he said: "I try to warn them, but they just double down."

The company is facing a pivotal moment later on Tuesday as it is set to deliver its first earnings call.

The company, which debuted on Wall Street in June at $135 per share, quickly became one of the hottest stocks of the year before losing a little less than half its value from its peak. Investors are now hoping the earnings report will provide evidence that SpaceX can justify its lofty valuation and reignite confidence after the stock's steep decline.

Shares closed Monday at $114.53, down 15% from the initial public offering price and nearly 49% below the record high of $225 reached just days after trading began. It was climbing close to 10% on Tuesday at 3:12 p.m. ET. The selloff has erased more than $1 trillion in market value from its peak, making the company's first earnings release one of the most closely watched events of the corporate season.

But despite the hype, analysts warn that the results themselves may not offer the clarity investors are seeking. Unlike mature technology companies, SpaceX remains unprofitable and continues to invest heavily in ambitious long-term projects spanning satellite internet, reusable rockets, artificial intelligence and future orbital infrastructure.

"There is so much that's in the future of the SpaceX story," Drew Cupps, portfolio manager and head of the 5Perspectives Growth Team at Polen Capital, told Bloomberg. "There's not a lot of here and now."

Wall Street expects SpaceX to report a second quarter loss of 24 cents per share on revenue of approximately $6.8 billion. However, those forecasts have become increasingly uncertain as analysts struggle to model a company with limited public financial history.

Bloomberg reported that consensus estimates for the company's quarterly loss have widened by about 18% over the past month, underscoring the uncertainty surrounding the business.

Instead of focusing solely on the quarterly numbers, analysts say management's outlook may carry even greater weight. Investors are expected to closely scrutinize updates on the company's Starlink satellite network, commercial launch business and artificial intelligence initiatives, all of which are viewed as key drivers of SpaceX's long-term growth strategy.

The earnings report also comes at a particularly delicate time because a major share lockup expiration is just around the corner.

On Aug. 6, roughly 911.5 million shares valued at more than $100 billion will become eligible for sale as restrictions on early investors expire. Bloomberg noted that billions of additional shares are scheduled to be unlocked later this year, creating the possibility of increased selling pressure and greater stock volatility.