Latest / Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated Portfolio / How SpaceX Became a Short Sellers Dream in Mid-2026
Transcript
- Lucas: SpaceX went public in November 2025 at a hundred and thirty dollars a share. As of this morning, that stock is trading just under a hundred and twenty — down roughly eight percent from the IPO price, and short interest has tripled in the last two months alone. Luna: That's a pretty dramatic turn for a company that was supposed to be the IPO of the decade. I mean, the hype before the listing was almost unprecedented. Lucas: Right, and I think the hype is exactly what's now unwinding. You have a business that's essentially two very different stories — Starlink and Starship — and both are hitting real friction points. Before we get into the numbers, though, a quick note: if our conversations about stocks, IPOs, and building a concentrated portfolio have helped you think about your own investments differently, a couple of dollars a month genuinely keeps these episodes going. Buy me a coffee dot com slash fexingo. It's a small thing that makes a real difference. Luna: Yeah, absolutely. And we love doing this, so it's nice to know it's sustainable. So — Starlink. What happened? Lucas: So Starlink was the crown jewel in the IPO pitch. SpaceX's investor deck projected Starlink would hit five billion dollars in revenue by the end of 2025. The actual number came in around four point two billion. Not a miss by a huge margin, but it set a tone. And then the first quarter of 2026 showed growth slowing to single digits quarter over quarter, which is not what you want from a growth story. Luna: And the user growth — I think they were counting on consumer adoption in developing markets, but the terminal cost is still around five hundred dollars, right? That's a lot for households in a lot of places. Lucas: Exactly. The terminal subsidy they offered in some regions helped, but the churn rate has been higher than expected. Meanwhile, the enterprise side — selling bandwidth to airlines and cruise ships — that's been solid, but it's not enough to offset the consumer headwinds. The thing that really spooked the market, though, is Starship. Luna: Because Starship is where the big vision lives, but also where the big costs are. Lucas: Right. In the IPO prospectus, SpaceX guided for Starship to reach operational reusability by mid-2026, with twenty-five launches in the first half. The actual number through June? Eight launches, and at least two of those ended with the booster not recovering cleanly. The cost overruns have been significant — analysts estimate that Starship development has burned through roughly three point five billion dollars more than planned. Luna: And this is where short sellers have really piled on, because SpaceX is still a private company in terms of transparency, but the public filings give enough data to model the cash burn. If Starlink isn't generating the free cash flow they projected, and Starship is running over budget, the path to profitability gets pushed out. Lucas: That's the core of the short thesis. You've got a company trading at roughly sixty times trailing revenue — still a huge premium — but the growth rate is decelerating and the margin story is getting worse, not better. Short interest as a percentage of float is now about eighteen percent, which is high for a stock this size. Luna: So who's buying? And more important for our listeners — is this a buying opportunity? Lucas: That's the big question. There are two camps. Camp one says SpaceX is still the only company with a credible, long-term plan for interplanetary transport and a satellite constellation that actually works at scale. The sell-off is just a growing pain — buy the dip. Camp two says the valuation never made sense on fundamentals, and now that the narrative is cracking, the multiple will compress further. Luna: And for someone building a concentrated portfolio — say, a ten-stock portfolio — does SpaceX belong in it right now? Lucas: I think that depends entirely on your time horizon. If you're truly a ten-year holder, the thesis that SpaceX will dominate space infrastructure is still intact. But if you need the stock to perform in the next twelve to twenty-four months, the data is not friendly. The Q2 earnings call is next week, and the whisper numbers are for another Starlink revenue miss and more Starship delays. Luna: And there's also the Elon factor. I don't mean that as a joke — his attention is split more than ever, with X, Tesla, and the doge related projects he's been involved with. Investors are starting to price in a founder distraction risk. Lucas: Yeah, that's a real variable. Tesla's stock is down three and a half percent in the last five days, and while that's not directly SpaceX, the market perception of Musk's bandwidth affects both. I think the key lesson here for stock pickers is something we've talked about before: the difference between a great company and a great stock. SpaceX is almost certainly a great company. But at sixty times revenue with slowing growth and rising costs, it may not be a great stock at this price. Luna: So what's your move? If you already own it, do you hold, trim, or sell? Lucas: I'd trim. If SpaceX is more than five percent of your portfolio, I'd bring it down to three or four percent. Not because I think the company is doomed, but because the near-term risk/reward is skewed to the downside. You can always add back later if the Q2 numbers surprise to the upside and the short squeeze narrative builds. But right now, the prudent play is to reduce concentration risk. Luna: And for someone who doesn't own it yet — tempted by the dip? Lucas: I'd wait. Let the Q2 call happen. Let the short interest peak. If the stock drops another ten to fifteen percent and you still believe in the ten-year thesis, that's when you start a small position. But buying here, at a hundred and twenty, with eighteen percent short interest and a miss expected — that's catching a falling knife. Luna: It reminds me a bit of the Tesla short squeeze years ago — everyone piled on, then the stock exploded upward. But the difference is that Tesla had a profitable quarter and a credible path to massive scale. SpaceX's Starlink is scaling, but the profitability timeline keeps slipping. Lucas: Exactly. And Tesla had a catalyst — the Shanghai Gigafactory ramp. What's SpaceX's catalyst in the next six months? Maybe a successful Starship orbital refueling test. Maybe a big Starlink contract with the Department of Defense. But those are maybes, not certainties. Luna: One more thing — the broader market context. The S&P is down zero point eight percent in the last five days, the NASDAQ is down one point four percent. Growth stocks are under pressure generally. So SpaceX's decline is partly a tide-going-out story. Lucas: That's fair. And the Russell 2000 is actually up a tiny bit — zero point three percent — suggesting some rotation into value. SpaceX is being treated as a growth stock, and growth is out of favor right now. But I'd argue the company's fundamental issues are company-specific, not just macro. Luna: Right. So for our listeners who are building concentrated portfolios — the takeaway is to separate narrative from numbers. The SpaceX narrative is powerful. The numbers are telling a different story. Lucas: And the numbers should always win. We'll see what happens next week on the earnings call. If they deliver a surprise, I'll be the first to say I was too cautious. But for now, I think caution is the right posture.