Leveraged single-stock ETFs tied to Space Exploration Technologies Corp Stock (NASDAQ:SPCX) are heading into what could be their most volatile week since the company’s blockbuster IPO, as Wall Street’s growing bearish bets collide with the aerospace giant’s first quarterly earnings report and a massive insider lockup expiration.
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The Defiance Daily Target 2X Short SPCX ETF (BATS:SPCQ), Leverage Shares 2X Short SPCX Daily ETF (BATS:SSPC) and GraniteShares 2x Short SpaceX Daily ETF (BATS:SNK) have each declined about 9%-10% in Tuesday’s session, ahead of SpaceX’s earnings scheduled in a few hours, as SpaceX shares rebounded from July lows. However, the pullback in inverse ETFs masks a sharp rise in bearish positioning against the underlying stock.
According to S3 Partners data cited by Bloomberg, short interest in SpaceX has surged to 219.3 million shares, representing about 34% of the public float and a bearish position worth roughly $24.6 billion.
That exceeds the dollar value of short bets against Tesla, Inc (NASDAQ:TSLA), underscoring growing skepticism ahead of two major catalysts this week.
Bearish Bets Continue to Build
The recent decline in inverse ETFs reflects SpaceX’s rebound from its July lows. At the same time, short interest has continued to climb, highlighting that many investors remain bearish despite the stock’s recovery.
SpaceX is scheduled to report second-quarter earnings after Tuesday’s closing bell, with options markets pricing in an implied move of roughly 14%, pointing to a potential post-earnings trading range of about $94 to $126.
The bigger catalyst may come on Thursday, when roughly 911.5 million insider-held shares become eligible for trading under the company’s staggered lockup schedule. The release will more than double the publicly tradable share count, potentially increasing selling pressure if insiders decide to cash out.
According to S3 Partners, the anticipated increase in share supply, rather than earnings alone, has been the primary driver behind the recent surge in short interest. Borrowing costs have also risen as demand to short the stock increased.
What It Means For Leveraged ETFs
For ETF investors, the combination of elevated short interest, earnings and the lockup expiration could drive significant trading activity across both bullish and bearish leveraged products.
A disappointing earnings report, weaker-than-expected guidance or heavy insider selling could validate the bearish thesis, potentially helping inverse ETFs such as SPCQ, SSPC and SNK recover from their recent losses.
On the other hand, stronger-than-expected results or a muted market reaction to the lockup expiration could spark a sharp short squeeze. With about one-third of SpaceX’s public float sold short, bearish traders may be forced to cover positions, accelerating gains in the stock while extending losses for inverse ETFs and boosting leveraged long funds.
Long-Term Growth Meets Near-Term Uncertainty
Despite the surge in bearish positioning, Wall Street remains constructive on SpaceX’s longer-term outlook. Analysts expect second-quarter revenue of approximately $6.8 billion and forecast revenue to nearly double between 2026 and 2027, reflecting optimism around the company’s artificial intelligence infrastructure, satellite internet and launch businesses.
That disconnect between strong long-term growth expectations and mounting near-term bearish bets has created an unusually uncertain setup for leveraged ETF investors.
Trading volumes and fund flows across the growing lineup of SpaceX single-stock ETFs are likely to remain elevated this week as investors position for what could be a significant volatility event since the company’s public debut.
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