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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 g
by lokar 3mo ago
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.
- brazukadev 3mo ago> Seems odd that they don't discuss a common reason to short a stock this was extensively discussed BEFORE the IPO. That is why it was overpriced. > 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. nope. the market transferred $80B to Elon Musk from the people that got scammed.
- lokar 3mo agoThat’s an odd non sequitur. I’m simply describing why a lot of the short positions are not from people who have any opinion on the value of the stock. They are engaged in an almost mechanical arbitrage like trade. People tend to imagine that all short sellers have some fundamental disagreement with the current value of the security, or are trying to manipulate to the value for some reason. It’s useful to understand there is a lot of volume that does not really care about the value debate one way or another.
- rogerrogerr 3mo agoMusk's shares are locked up for a year.
- brazukadev 3mo agoand? Are you implying that Elon doesn't own the 80B spacex got from the IPO?
- rogerrogerr 3mo agoI am implying that because it is true. SpaceX owns the $80B. Elon owns stock in SpaceX. The IPO was a primary offering in which SpaceX issued new shares and received the proceeds. If Elon had personally sold shares, the prospectus would have identified him (or other selling shareholders) in a secondary offering. It doesn’t.
- brazukadev 3mo ago> Elon owns stock in SpaceX. He also owns SpaceX management and its assets.
- theplumber 3mo agoI 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…
- John23832 3mo ago> 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. The 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.
- kubb 3mo agoWe all know that but people will attack you with „nobody can get a payload to the orbit cheaper”. Yeah, nobody can, and there’s limited need for that.
- ruidndnfjr 3mo agoNot to mention that folks that are ‘locked up’ probably had a bank/hedge fund engineer hedges until they can get out
- bostik 3mo agoMatt 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. 0: https://bloom.bg/4f7pFnd https://bloom.bg/4f7pFnd
- rlt 3mo agoYes, that’s what the parent comment meant by “there is going to be a ton of new float fairly soon”