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Elon Musk issues red flag warning to group of SpaceX traders — but they keep doubling down. Are you making the same bet?

August 8, 2026 11:37 AM GMT · Yahoo Finance

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Elon Musk has issued another warning to traders betting against SpaceX (NASDAQ:SPCX).

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"I try to warn them, but they just double down …" Musk wrote on X (1), responding to a post highlighting the rapidly growing bearish wager against his rocket, satellite and artificial intelligence company.

His warning came as data from S3 Partners (2) showed roughly 95% of the SpaceX shares available to borrow had been loaned out, translating to 34% short interest as a percentage of the float.

Short sellers borrow shares and immediately sell them, hoping to buy them back later at a lower price and pocket the difference.

But when a heavily shorted stock suddenly climbs, short sellers can be forced to repurchase shares to limit their losses. That buying can push the price even higher, potentially creating a cycle known as a short squeeze.

"The survival probability of firms who maintain a significant short position in SpaceX over time is very low," he warned in a separate post (3) in July.

Yet short sellers have continued to increase their bets.

The strategy has paid off handsomely so far. SpaceX shares fell from a post-IPO high of $225.64 to below the company's $135 offering price, leaving short sellers with an estimated $15.5 billion (4) in paper profits by late July. Roughly 360 million shares — equal to 56% of the free float — were out on loan at that point, according to data from analytics firm Ortex Technologies.

"There is no sign of short sellers taking profits on SpaceX," Ortex co-founder Peter Hillerberg told Reuters. "If anything they are leaning in harder."

That strategy may continue to profit if SpaceX continues to tumble. But it could also become extraordinarily painful if shares suddenly spike up.

A bet that can turn against you quickly

SpaceX has given skeptics plenty of ammunition.

The company's sky-high valuation, aggressive spending and exposure to the highly speculative AI trade have raised questions about whether investors pushed the stock too far, too quickly.

After climbing nearly 70% from its $135 IPO price, SpaceX shares reversed course and entered August roughly 50% below their peak. The stock then plunged 13% following its first earnings report as a public company before staging a rebound.

That means many short sellers have been right about the general direction of the stock.

But being right so far does not necessarily make the position safe.

Shorting carries an unusual risk. When you buy a stock without leverage, the most you can lose is the amount you invested because the share price cannot fall below zero.

A short seller's potential losses are theoretically unlimited because there is no ceiling on how high a stock can rise.

The enormous size of the bearish bet could make SpaceX particularly volatile. Ortex previously estimated (5) that every $1 move in the stock represented more than $300 million for traders on the short side.

Heavy buying from retail investors could add fuel to any sharp move higher.

Even after SpaceX's post-earnings plunge, it became the most heavily purchased U.S. stock among retail investors tracked by Vanda Research (6).

For now, SpaceX could continue falling. It could suddenly rebound. Or it could swing violently between the two.

The bigger lesson may be what happens when investors become so convinced of one outcome that they keep increasing the same wager.

Read More: Millionaires under 43 hold only 25% of their wealth in stocks. Here's where their money is actually going

Invest without betting everything on one outcome

Concentration can produce spectacular returns when an investor is right.

It can also turn one incorrect call into a portfolio-destroying mistake.

You do not need to avoid individual stocks entirely. But spreading your money across different companies, industries and asset classes can reduce the damage if one position moves sharply against you.

Broad-market exchange-traded funds offer one straightforward approach. Rather than trying to identify the next SpaceX — or predict when a popular stock will collapse — investors can gain exposure to hundreds or even thousands of businesses through a single investment.

Dollar-cost averaging may also help take emotion out of the process. By investing a fixed amount at regular intervals, you avoid placing your entire bet at one potentially terrible entry point.

If you prefer a hands-off, tech-forward approach to building wealth, Vanguard's Digital Advisor puts the investing expertise of one of the world's largest asset managers right at your fingertips.

It takes the guesswork out of investing by building a personalized portfolio for you using Vanguard's well-known low-cost ETFs and mutual funds — then keeps things running smoothly with automatic rebalancing.

The platform also offers guidance on saving for retirement and lets you set additional goals as your life evolves.

It can even help you think through debt repayment strategies, potentially freeing up more cash to invest toward your long-term plans.

With a minimum investment of just $100, it's an easy way to get started with professionally guided investing.

For every $10,000 in an all-index portfolio, you'll pay approximately $15 to $16 per year.*

You can even test-drive the Vanguard experience with no advisory fees for the first 90 days.

*All investing is subject to risk, including the possible loss of the money you invest.

For those who still want to pick individual winners and losers, research becomes especially important.

Platforms like Moby can help investors look beyond social-media excitement. Their team of former hedge fund analysts does the heavy lifting — breaking down the market, flagging quality stocks, and making the research easy to digest.

In fact, across nearly 400 stock picks over the past four years, Moby's recommendations have beaten the S&P 500 by almost 12% on average. Their research keeps you up-to-the-minute on market shifts, and takes the guesswork out of choosing investments.

Plus, their reports are easy to understand for beginners, so you can become a smarter investor in just five minutes.

Own a hedge against market turmoil

Diversification does not have to end with the stock market.

Gold has served as a store of value for thousands of years and is often viewed as a hedge against inflation, currency debasement and financial instability.

Unlike a stock, bond or bank deposit, physical gold does not represent somebody else's financial obligation. Its value does not depend on a company producing profits or a borrower repaying a loan.

That distinction can become especially valuable when speculative assets are swinging wildly or confidence in the financial system begins to weaken.

Gold can still fall in price, and it does not produce income. But because its performance is driven by different forces than a high-growth technology stock, holding some gold may reduce a portfolio's dependence on a single market narrative.

Over the past five years, as inflation continued to erode the value of paper currency and investors looked for protection outside traditional stocks, gold has climbed 146%.

Some experts see further potential. JPMorgan CEO Jamie Dimon has said that in this environment, gold can "easily" rise to $10,000 an ounce.

One way to invest in gold that can also provide significant tax advantages is to open a gold IRA with the help of Goldco.

Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold, making it a compelling potential option for those wanting to ensure their retirement funds are diversified during rough economic times.

Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.

If you're curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today. Just keep in mind that gold is typically best used as one part of a portfolio, not a wholesale replacement.

Generate income beyond Wall Street

Real estate offers another way to diversify away from the daily movements of the stock market.

High-quality properties can generate recurring income through rent, allowing investors to receive recurring cash flow without waiting for asset prices to rise.

Real estate is also known for offering protection against inflation. As the cost of materials, labor and land increases, property values and rents tend to rise as well.

Over the past ten years, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index (7) has jumped by 88%, reflecting strong demand and limited housing supply.

Of course, buying and managing a rental property typically requires substantial capital and comes with responsibilities ranging from maintenance to finding reliable tenants.

The good news? You don't need to buy a property outright — or deal with leaky faucets — to invest in real estate today. Crowdfunding platforms like mogul offer an easier way to get exposure to this income-generating asset class.

As a real estate investment platform offering fractional ownership in blue-chip rental properties, mogul gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 a.m. tenant calls.

Founded by former Goldman Sachs real estate investors, the team hand-picks the top 1% of single-family rental homes nationwide for you. In other words, you gain access to institutional-quality offerings for a fraction of the usual cost.

Each property undergoes a rigorous vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.

Another option is Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.

Lightstone DIRECT's direct-to-investor model ensures a high degree of alignment between individual investors and a vertically-integrated, institutional owner-operator — a sophisticated and streamlined option for individual investors looking to diversify into private-market real estate.

With Lightstone DIRECT, accredited individuals can access the same multifamily and industrial assets Lightstone pursues with its own capital, with minimum investments starting at $100,000.

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