SpaceX's Index Inclusion Looms as Elon Musk Denies Smartphone Rumor and Short Bets Hit a Record

With 31% short interest and $4.3B in forced buying due to July 7 Nasdaq-100 inclusion, SpaceX stock faces a potential short squeeze. Musk denies WSJ smartphone report.

The countdown to SpaceX’s Nasdaq-100 entry on July 7 is shaping up as a flashpoint for the stock, but a very different drama is also playing out in the headlines. Elon Musk took to X on Wednesday to call a Wall Street Journal report about a SpaceX smartphone “completely false” — a rare public rebuttal that underscores the heightened scrutiny the company now faces as a public entity. The alleged handset, which the Journal said featured an in-house operating system, chips from Qualcomm, and xAI’s artificial intelligence technology, was described as being in an early prototype phase. Musk offered no additional details, and neither SpaceX nor Qualcomm responded to requests for comment. The episode has reignited speculation about the company’s consumer-hardware ambitions — even if the device itself may never materialize.

While the smartphone saga grabs headlines, the real action for traders is bubbling under the surface. Short interest in SpaceX has exploded to 31% of the freely tradable float, equivalent to roughly 196 million shares, according to data from Ortex. That figure surged from 13% in just one week. The math is brutal: every one-dollar move in the stock now shifts $200 million between gains and losses for short sellers. Until recently, the bears were sitting on a collective paper profit of $2.5 billion as the stock slid toward $153. But the recovery above $160 has erased most of that, flipping the position into a roughly $760 million mark-to-market loss.

The setup is a textbook recipe for a short squeeze, and the catalyst is already locked in. July 7 is the day SpaceX joins the Nasdaq-100 under an accelerated process — an unusually fast time frame, coming just 25 days after its June 12 IPO. Passive index funds will be forced to buy regardless of valuation. J.P. Morgan and BNP Paribas peg the required inflows at roughly $4.3 billion, while other forecasts range as high as $7-10 billion. Those estimates assume SpaceX will start with a weight of less than 1% due to modified market-cap rules, but the sheer volume of forced buying could still ignite a squeeze. The cost of borrowing shares to short is currently around 1% — cheap enough to hold, but also cheap enough to unwind in a panic.

Behind the technical fireworks, SpaceX’s fundamental picture is a tale of two very different businesses. Starlink continues to deliver: subscribers doubled year-over-year to 10.3 million in the first quarter of 2026, and the satellite-internet segment generated $11.4 billion in revenue for the full year 2025, with an operating profit of $4.42 billion. The AI infrastructure arm tells a different story. On $3.2 billion in revenue in 2025, the division posted an operating loss of $6.4 billion. Yet SpaceX is doubling down. A new $6.3 billion deal with Reflection AI is expected to contribute $150 million in monthly revenue starting July 1, and an existing arrangement with Alphabet worth $920 million per month kicks off in October.

That aggressive spending is reflected in the stock’s rich multiple. At a market capitalization of roughly $2.1 trillion, SpaceX trades at about 41 times forecast 2026 revenue — a valuation that splits Wall Street cleanly down the middle. Wedbush initiated coverage with an Outperform rating and a $190 price target. Morningstar stands starkly opposed with a Sell rating and a fair-value estimate of $63, citing cumulative losses of $41.3 billion since the company’s founding.

The next fundamental milestone comes on August 6, when SpaceX reports its first quarterly earnings as a listed company. Until then, market attention is likely to be torn between the forced index flows on July 7 and the noisy backdrop of Musk’s public denials. The smartphone rumor may be dead, but the question of how much of the expected multi-billion-dollar index inflows actually materialize — and whether the stretched short positions can withstand the pressure — will keep traders on edge through the holiday-shortened week.