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. Shorting the newly public SPCX shares costs just 1–3% annualized.
Longs are winning in some "space" names contested by short sellers. Intuitive Machines carries 35M shares short, but YTD passive long demand more than doubled (+101%) while active longs (+52%) and hedge fund longs (+97%) all piled in faster than the +34% short build.
Short interest sorts by business maturity, not the "space" label: pre-revenue, milestone-dependent names (ASTS, SPCE, LUNR) plus leveraged EchoStar carry 24–32% of float, while cash-generating operators sit in single digits — Rocket Lab at 5.4%, Viasat at 7.3%, both with negative 1Y Z-scores as shorts cover.
Not all of the sector short interest is directional. A meaningful share for some names is tied to convertible-bond arbitrage rather than outright bearish bets — over half of the short interest in Voyager, EchoStar, and Planet Labs is estimated to be convert-related, with roughly a third at Intuitive Machines, versus just 22% of shorts in AST SpaceMobile.
Shorts are building, but passive longs are buying faster — the bears keep getting absorbed.
As the space sector excluding SPCX pulls back from its late-May highs, shorts are pressing the giveback while passive longs keep buying the dip. Most Space related names ran hard this year before a sharp month of red following the mid-May peak, with Virgin Galactic, York Space Systems, and AST SpaceMobile the notable exceptions still green over the month.
Source: Bloomberg Worksheet featuring S3 Partners data
Short sellers have concentrated their positioning in names where business models remain unproven — AST SpaceMobile, Virgin Galactic, and Intuitive Machines all carry at least 20% short interest as a percent of float — yet in many of these contested names the long side is winning. Intuitive Machines is the clearest case: every long cohort grew faster than its +34% short build YTD — passive +101%, active +52%, hedge fund +97%. Planet Labs shows the same shape against a short position that barely moved (+2%), with passive up +27% and hedge fund longs +26%.
Rocket Lab and Viasat, the cash-generating operators, ran the other way: shorts covered both over the past month and YTD (−22% and −26%) even as passive ownership held or grew. For the most part, the bears are pressing higher-conviction trades in a sector where long ownership has continued to grow underneath them.
The picture is muddier where convertible-bond arbitrage drives the short. EchoStar's short rose +74% and Voyager's +50%, but a large share of both is convert-hedging rather than directional bearishness — and convert arb mechanically shorts more shares as the stock rises and the bond's embedded option starts to trade more like the underlying. Voyager's long side built alongside it regardless (active +59%, passive +36%, hedge fund +35%). At the genuinely directional shorts — AST SpaceMobile's +41% build and Virgin Galactic's +86% — the short side outran the long, but each still met rising passive ownership.
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