SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control

The stock market rarely offers a setup as structurally tense as the one currently materializing around Space Exploration Technologies Corp. (NASDAQ: SPCX). Institutional bears have quietly built a $24.6 billion short position against the company. To put that into perspective, this nominal dollar value now exceeds the short exposure historically carried by legacy automakers and rival technology sector firms during their most volatile trading periods.

This accumulation of negative sentiment is crashing headlong into two distinct binary events. The inaugural public earnings report scheduled for Aug. 4 will finally open the financial records of the primary orbital launch provider. Just 48 hours later, on Aug. 6, a lockup expiration threatens to release a wave of newly unrestricted shares into the market. For investors, understanding the underlying mechanics behind this setup helps separate long-term fundamental business value from temporary market noise.

Unpacking the Payload: Why Shorts Bet Against Orbital Dominance

To understand why institutional capital is aggressively positioning against SpaceX, even though the business effectively controls access to orbit, investors can look beyond launch manifest numbers and examine the balance sheet. The short thesis relies heavily on the substantial capital expenditures (CapEx) required to fund future growth projects. Forward projections model capital outlays expanding from roughly $48 billion this year to around $118 billion by 2028, primarily directed toward Starship development and expanding underlying artificial intelligence (AI) infrastructure.

Institutional bears are betting that this aggressive cash burn will compress operating margins and force a fundamental revaluation of the equity, which has already pulled back 31% from its mid-June highs to trade near $111. Beyond capital outlays, institutional short sellers are leveraging SpaceX's current float dynamics.

The public float remains highly restricted at about 640 million shares. Recent market reports show that short interest has expanded past 219 million shares. Calculating exposure against the restricted circulating supply shows that roughly 34% of the tradeable float is currently sold short.

In public equity markets, when short interest reaches past 20%, it signals a heavily crowded trade. At 34%, structural friction is significant, creating an intense trading environment for anyone holding a position.

Can Starlink Margins Outrun the CapEx Burn?

The fundamental anchor for all of this positioning arrives on Aug. 4. Wall Street consensus anticipates second-quarter revenue of over $6.8 billion, alongside an estimated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of about $2 billion. Despite strong top-line sales, heavy research, development, and infrastructure costs are projected to pull net results into a bottom-line loss of roughly 25 cents per share.

Headline revenue numbers remain secondary to the underlying unit economics of the Starlink satellite communications division. Starlink is SpaceX's primary financial engine, and analysts are closely watching operating margins in the satellite broadband division. High-margin contracts in the aviation and maritime sectors offer clear pricing power that can significantly alter long-term cash flow projections.

Margin performance takes on added importance given emerging competition in low Earth orbit broadband services, as Amazon (NASDAQ: AMZN) advances filings for its own competing satellite constellation, SpaceX benefits from demonstrating that its early-mover advantage translates into a durable margin moat.

If management demonstrates that Starlink's high-margin commercial subscribers are scaling quickly enough to cover heavy launch costs, it directly challenges the bear thesis. Strong margin expansion helps reframe heavy forward capital outlays as a defensible competitive barrier rather than an operational drag.

Payload Drop: 911 Million Unlocked Shares

Even if the Q2 financial results deliver encouraging fundamental progress, market participants face a distinct structural shift on Aug. 6. A lockup expiration is a scheduled milestone at which early venture investors, strategic partners, and company employees gain permission to trade their pre-initial public offering shares on open exchanges.

For SpaceX, the upcoming unlock releases approximately 911 million shares. This milestone will more than double the currently tradeable public float, expanding available supply from roughly 5% to over 12% of total outstanding shares.

This prospective supply expansion explains why short sellers have built such a concentrated trade. Bears are positioning ahead of the unlock, assuming that early employees and venture funds may seek liquidity after a volatile post-IPO trading window. When 911 million shares become eligible for market trading, the sudden influx of supply can absorb existing buy orders, creating downward price pressure regardless of underlying operational execution.

Flight Path Forward: Navigating Aerospace Volatility Post-Lockup

The combination of a $24.6 billion short book, an inaugural quarterly report, and a significant float expansion sets up a classic study in market price discovery. Wall Street is actively weighing SpaceX's long-term economic moat against the near-term realities of cash burn and share dilution.

If the upcoming earnings update highlights accelerating Starlink profitability, that fundamental momentum can provide enough buying interest to absorb the share unlock on Aug. 6. Conversely, guidance indicating that capital expenditures will weigh on near-term cash flows could give early shareholders a reason to realize gains, validating the short trade in the short term.

Investors seeking an entry point might consider observing how the market digests the influx of 911 million shares before committing fresh capital. Allowing supply-and-demand dynamics to normalize after a lockup expiration often provides clearer pricing visibility. Those taking a longer-term view on the growing space economy can monitor Starlink's unit economics and margin trajectory as the primary indicators of durable corporate health.

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Why Rare Earth Processing Could Be the Real 2027 Opportunity

Defense stocks jumped on earnings this quarter. Big tech keeps raising its capital expenditure (CapEx) guidance for AI infrastructure. Both stories are getting louder. The material that makes both of them possible is getting quieter.

That's the read from Anupam Ghildyal, COO of REalloys Inc. (NASDAQ: ALOY), a North American rare earth company built around what the industry calls mine-to-magnet: owning the deposit, refining it, and turning it into the metal and magnets that defense systems and AI hardware actually run on.

The Bottleneck Nobody Prices In

Rare earths show up in more places than you'd ever guess. Fighter jets, missile guidance, aircraft carriers, GPU cooling systems, EV motors, industrial motors, the speaker in your phone—all of it needs magnets, and magnets need rare earth metals. Take away the supply, Ghildyal argues, and the country couldn't sustain a prolonged conflict on current stockpiles alone.

China currently dominates the processing and metallization side of that chain, and Ghildyal argues that's the actual chokepoint, not mining. There are, in his words, hundreds of mines globally in some stage of development. Processing capacity that can turn ore into usable metal is far scarcer, and that scarcity gets used as leverage. Ghildyal points to trade negotiations as an example: when tariff threats escalate, rare earth supply becomes the tool used to bring the other side back to the table.

That scarcity is also why pricing outside China runs well above the Chinese benchmark index, particularly for heavy rare earths like dysprosium and terbium, according to Ghildyal. It's why REalloys has built its strategy around metallization rather than mining alone. The company owns the Hoidas Lake heavy rare earth deposit in Saskatchewan, one of the larger heavy rare earth assets in Canada, but has focused its capital on processing partnerships instead of mine development first, betting that refining capacity is the scarcer, more valuable asset to control.

A Deadline That Doesn't Move

Starting Jan. 1, 2027, defense contractors will be barred from incorporating Chinese-origin rare earth materials into weapons systems procured under federal contracts. On July 20, 2026, the White House added another layer, issuing an executive order titled "Securing America's Defense Supply Chains and Ensuring Domestic Acquisition of Critical Materials," which tightens the waiver process contractors have relied on. That matters because waivers were the release valve. As that valve closes, demand for domestic and allied processors goes up, not down.

The catch: capacity isn't close to catching up yet. The International Energy Agency assessed in October 2025 that China refines 19 of 20 strategic minerals, controlling roughly 70% of the market for them on average. The gap between the 2027 deadline and available non-Chinese processing capacity is the whole reason this trade exists right now.

Demand isn't only coming from defense contractors, either. Ghildyal points to humanoid robotics, which he estimates use several kilograms of rare earth magnets per unit, along with drones and industrial motor manufacturers now looking to lock in domestically produced material. None of that demand has an established supply chain behind it yet.

Building Fast on Two Fronts

In roughly a year, REalloys assembled a processing partnership with the Saskatchewan Research Council, acquired an Ohio metallization facility, signed a letter of intent with South Korea's JS Link on magnet manufacturing, and lined up feedstock agreements, including a heavy rare earth offtake with Critical Metals Corp. (NASDAQ: CRML). The company also raised capital in stages, first around $50 million, then $100 million, and secured a letter of interest from the U.S. Export-Import Bank tied to a second manufacturing phase.

The board includes Steve DuMont, chairman and president of GM Defense; retired four-star General Jack Keane; former Canadian Ambassador to the U.S. David MacNaughton; former Saskatchewan Premier Brad Wall; and Joe Kasper, former chief of staff to Secretary of Defense Pete Hegseth. It's a lineup that signals how much this has become a national security story, not just an industrial one.

Ghildyal frames the milestone-based nature of government support as a feature, not a risk: funding unlocks in stages tied to actual production, which he argues makes the capital more durable than critics assume, and separates REalloys from companies asking investors to wait years for a return on promises alone.

Weighing the Upside Against the Risk

The upside case is a hard 2027 deadline, thin non-Chinese supply, and a company moving faster than most peers toward actual production. MP Materials Corp. (NYSE: MP) and USA Rare Earth, Inc. (NASDAQ: USAR) are the more established names investors already track in this space, but REalloys is positioning itself around the metallization step that both of those companies also depend on for their own finished products.

The risk is just as real. REalloys reported a net loss of $106.7 million for the first quarter of 2026, with earnings per share of $1.98 below consensus estimates, and the stock has lost about 60% of its value since hitting its 52-week high in March. Much of that loss traces to non-cash stock compensation rather than core operations, but the company has also diluted shareholders through repeated capital raises to fund its buildout. This is a pre-revenue growth story, not a cash-flow story, and that distinction matters for how much of a position it earns in a portfolio built around risk tolerance rather than conviction alone.

Stay focused on the 2027 deadline. That's the date that decides whether this entire supply chain gets built in time—and whether the companies racing to build it get paid for it.

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The S&P 493 Are Staging a Comeback—This Value ETF Offers Broad Exposure

The tech-heavy NASDAQ-100 officially entered a correction territory, falling more than 10% from its June 2 year-to-date (YTD) high as some of the biggest semiconductor names and Magnificent Seven stocks spearheaded a sell-off fueled by artificial intelligence (AI) capital expenditure (CapEx) concerns and mixed earnings results.

But outside of those mega-cap companies, the remainder of the market is picking up the slack as the rotation out of tech has benefited a handful of overlooked sectors. Over the past three months, healthcare and financials have been the S&P 500’s top performers, gaining more than 16% and 11%, respectively. Over the past six months, nine of the index's 11 sectors are in positive territory.

For investors looking to take advantage of the subsequent opportunities in value stocks, one exchange-traded fund (ETF) perfectly fits the bill.

Tech’s Correction Highlights Broadening Resilience

According to Mark Hackett, chief market strategist at Nationwide Financial Investment Management Group, despite the Magnificent Seven’s underperformance this year, “the broader market has remained resilient, suggesting that leadership is broadening rather than breaking.”

Hackett notes that earnings growth for the other 493 companies in the S&P 500 could overtake the Magnificent Seven in the second half of 2026, which signals that broader earnings participation could become the defining feature of the next phase of the bull market.

“Leadership is dispersing across a wider opportunity set,” Hackett says. “That evolution appears increasingly driven by fundamentals rather than positioning alone.”

The operative word there is “fundamentals.” Chipmakers and hyperscalers drove the market higher during the earlier phase of the AI trade, with triple-digit gains seemingly becoming the norm as valuations expanded across parts of the technology sector. But a return to fundamentals—specifically, a greater focus on earnings, cash flow, and valuation—could benefit investors who know where to look for broader earnings growth.

In a June 17 research note, Gina Martin Adams, chief market strategist at HB Wealth, wrote that “as long as the economy continues to strengthen, the story for the markets may be rotation toward the ex-Mag7 stocks.”

Schwab’s All-in-One Large-Cap Value Solution

With approximately $15.7 billion in assets under management, the Schwab U.S. Large-Cap Value ETF (NYSEARCA: SCHV) provides investors with precisely that: a means of gaining broad exposure to value by tracking the Dow Jones U.S. Large-Cap Value Total Stock Market Index. While the fund does not omit AI stocks—Micron Technology (NASDAQ: MU) is one of its three largest holdings—it limits the impact of any single company.

Tech still makes up about 18% of the ETF’s portfolio, while financials account for approximately 21%. Industrials, healthcare, and consumer staples round out the fund's five largest sector allocations.

Similar to its guardrails against overexposure to tech, SCHV also provides limited exposure to this year’s top-performing sector, energy, a highly cyclical sector that has experienced heightened volatility this year amid sharp swings in oil prices and the conflict involving Iran. Energy stocks account for nearly 5% of the fund.

The ETF carries a net expense ratio of just 0.04%. Its top holdings provide a glimpse of its inherent diversification, which is a breath of fresh air given the concentration risk posed by market-weighted index funds these days.

Among the SCHV’s top-10 holdings are Micron, JPMorgan Chase (NYSE: JPM), Berkshire Hathaway (NYSE: BRK.B), Exxon Mobil (NYSE: XOM), and a trio of Dividend Kings in Johnson & Johnson (NYSE: JNJ), Walmart (NYSE: WMT), and AbbVie (NYSE: ABBV). That sample spans tech, financials, energy, healthcare, and consumer staples.

Following the Smart Money

When tech becomes overextended and sells off, Wall Street’s adjustments can provide a clue about where large investors are shifting exposure. Over the past 12 months, institutional inflows into SCHV have substantially exceeded outflows.

Meanwhile, the bears betting against the fund have all but disappeared. Short interest represents only a tiny percentage of SCHV’s outstanding shares, pointing to limited bearish positioning against the diversified fund.

But perhaps the most convincing argument that can be made in favor of this fund is its performance. SCHV has materially outperformed the S&P 500 so far this year while also providing shareholders with a yield of approximately 1.8%.

For investors looking beyond the Magnificent Seven, SCHV offers low-cost exposure to hundreds of large-cap value stocks without placing an outsized bet on any one company. Whether that outperformance continues will depend partly on the economy remaining strong enough to support the broader earnings recovery behind the S&P 493 comeback.

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