Traders in the options market are preparing for a potential $225 billion swing in the value of SpaceX shares following its first-ever earnings report. The company’s shares have fallen 43% from a closing peak of $201.80 set after its record-breaking June 12 debut. Despite the slide, SpaceX still has a $1.5 trillion market capitalization.
Earnings Expectations
SpaceX is expected to post a quarterly loss before interest and taxes of $1.55 billion on revenue of nearly $7 billion. The stock’s slump, its limited trading history, and uncertainty over whether its maiden earnings will show its revenue can support its valuation, have driven pricing on its options well beyond what is typical for large mature companies.
Options are pricing a roughly 15% move in SpaceX shares in either direction, but with a bearish tilt, according to data from options analytics service ORATS. The overall volatility level is massive, said Ophir Gottlieb, CEO of Capital Market Laboratories.
Investor Nervousness
Investor nervousness is evident in high short interest and flows into bearish leveraged funds as well. Short sellers, who bet against shares by borrowing and then selling them into the market, smell blood. Short interest remains near a record high, with roughly 63% of SpaceX’s free float on loan.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
