Short sellers notch $8.7B profit as SpaceX shares dip to IPO price
reuters.com
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Data centers submerged in the ocean or placed in the desert seem much more promising. But I have only an enthusiast's understanding of rockets and physics, so I'm genuinely open-minded to the possibility.
Is there anyone credible who thinks this is a plausible pathway for SpaceX to make huge amounts of profit?
I've done builds that ran for 5+ years with virtually no physical attention, just continual degradation as hardware is taken out of service. There's also not much money to recover from 5+ year-old hardware.
I used to run AI inference GPU servers in road vehicles, which is probably an even harsher environment than a single rocket launch, and the vibration problems are real but solvable.
Also space has more radiation
I think this could be done at an interesting scale even on Falcon 9 alone. If Starship does even 20% of its early design goals, it'll beat Falcon 9 and we could see orbital servers being demised and replaced every 3 years, maybe even 2, for ones with abnormally high failure rates.
Now, whether or not this will all make money in the end has a lot to do with what's going on down here on terra firma and how long it takes to get useful capacity into orbit.
(It's taken 7 years to get Starlink capacity enough for serving 10M customers. Verizon FiOS did 10M in 5 years. AT&T Fiber took 4-5 years to deploy to 10M. So, space isn't a lot slower than terrestrial.)
But it depreciates faster. That fiber run is lasting for 50 years, not 5. You need 10x the installation capacity just to keep up.
If the orbit isn't full, all they are is additional compute.
The biggest issue with space is not repairability but heat - when you’re in a vacuum the only way to disperse heat is through black body radiation and that’s horribly slow compared with normal mechanisms. It means you need giant physical structures whose sole job is to accept heat from the processing core and radiate it away and have so much more material that you can radiate it at the speed you generate. It’s a huge unsolved physics problem which is why everyone is skeptical.
The big win of being in space is just a worse alternative to using an intermediary heat transfer medium.
The problem with data centers in space is one of materials science and engineering: how to make radiators large enough and effective enough to cool it while also being economically feasible, both in terms of construction and getting them up there in the first place.
We can make a space data center right now. It would just be terrible and expensive.
COTs GPUs throttle at about 90-100C but that's because they have plastic parts and solder that melts. Those are relatively easy to eliminate.
We haven't tried much to scale up operating temp.
(Electronics that works at 200C do exist, but they're not gonna meet a modern smartphone's specs, let alone a datacenter)
The story I heard was intel failed to deliver on die shrinks that were supposed to increase thermal efficiency. The fan also had poor routing and basically did nothing.
Apple was clearly not at the top of their game for that design, nor would you expect them to be as the decision was likely already made to move to apple silicon.
Musk’s proposal is to put 1 rack per satellite drawing 150kw using 110 m^2 of radiators (1/4th that of the ISS). The only way to do that is by running the satellite at 71-100C which is a problem for the chips to actually run.
So the open questions are: * can they actually dump the heat and can they have the racks running so hot for so long * is it economical to in one year replace all the capacity you launched 5 years ago (you save up to 0.5B in electricity costs over that time frame but that doesn’t seem like a lot for having to replace that much capacity buildup)? And given they’re running racks way hotter than has been validated on earth, will those chips end up lasting 5 years (including space radiation).
Pretending like it’s a solved problem is neat but I’m not saying sure it’ll be so easy.
In other words, run fully lights-out datacentres that no humans will access during normal operation - this allows you create more extreme temperature gradients and to replace the atmosphere with CO2 (or even He2), both of which will make your cooling solution much more efficient as well as increasing rack density and perhaps even taking the place of a fire suppression system.
The reason that no-one's actually doing that at scale is that it's currently significantly more expensive than traditional datacentre designs. And yet, that's still much less expensive than boosting racks into space and then letting them burn up in the atmosphere five years later.
The problem is not solved for something of this scale, I think its solvable, but no has done anything at the size these would have to be. And if the physics and engineering can be made to work, they are unlikely to be solved AND ALSO be economical.
It's classic type problem where the choices are:
- economical
- in-space
- big
Now pick two.
There is also the unsolved problem that the radiators would be absolutely massive in area. Making damage from flying objects, meteorites, space jump, close to 100% likely over any reasonable life span. Repairs would be expensive AF. Again economics is the driver of why this is dumb.
Definitely not definitive but it's plausible current hardware could survive with minimal modification
my question was more whether the hardware would need extra redundancy or shielding in order to not have unacceptably high error rates
https://arstechnica.com/space/2026/07/how-hard-is-it-to-buil...
I too agree that SPCX’s space business is real and valuable, but it’s (almost completely) irrelevant here.
All of the losses are from the xAI/Twitter side of the house. And Elon Musk needs a flimsy story so that no one sues him. It doesnt have to be a believable story, it just needs to be enough so that no lawyer cares to bring a case in Texas vs SpaceX and Elon for breach of fiduciary duty.
The story did its job. Elon offloaded the money losing Twitter/xAI out of his personal wealth and onto the public through SpaceX. Done and done. SpaceX is now an AI company (or contains one) and needs to perform as such.
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It's literally the same story as Tesla/Solar City. Make up bullshit about solar panel synergy with EVs and buy out his cousins failing company. Make it TSLA shareholders problem for figuring out how to make a profit from the failing company, it's no longer Kimball Musks concern since the buyout
You can figure out the weight of the thing based on the total power output, and "power to weight ratio" from SpaceX's own diagrams. Then look up how much it costs to launch per ton, and even look up what they are projecting it will cost with Starship. Even if they get costs down, it's still astronomical. I just can't figure out who would pay that much money to put a rack into space. There's no way the power savings are worth it. Unless you have some niche where you need your workload in space, I can't see the value at all.
Scott Manly (who I think is credible) has a video where he goes over the logistics of SpaceX's space based data centers. He seems to think its an idea worth pursuing, but its important to note that his expertise is space tech, and not business strategy.
Inference the latency becomes trivial.
Other things, I suspect latency is too high again.
The ISS produces about 120 kilowatts of electricity.
An Nvidia Blackwell B200 GPU uses 1.2 kilowatts of electricity.
So, you would need a similar array of solar panels and radiators just to power 100 of them. You probably would need 2-3 launches for a satellite this big, and realistically, you would just make smaller satellites.
That's $4,000,000 worth of GPUs, A couple millon or more of RAM, SSDs, etc., a radiation-proof satellite housing to support all of that hardware, solar arrays, launch costs ($74M per Falcon launch), all for maintenance to be impossible and the hardware to become obsolete in a couple of years.
It's a delusion unless we invent some way to go to space for free.
Even if we do somehow succeed at affordably dumping tons of GPUs into orbit, what do we do about the Kessler Syndrome?
The thing has two main parts. One, a bunch of solar panels, shielding and radiators. This the heavy / expensive to launch part, but should last for what, decades? Two, a bunch of GPUs/servers. These become obsolete, but so what? They're not that heavy, so every few years you send up another rocket and swap them out.
SpaceX's launch cost, the internal spend to put one Falcon 9 Starlink payload in orbit, with a return to launch site booster recovery, is about $15M.
If you're going to make such assertions, do the legwork to make sure your numerical claims aren't off by 500%.
Oh is that all? Those are major data center concerns.
Don't forget the biggest one: an ocean-based system could be pulled up and serviced without the need for a human-rated rocket. Oh, and bandwidth/latency.
The ONLY benefit of space is that it doesn't require siting a major construction in a town full of angry residents, and it has abundant solar power. But given how much it costs to get the solar panels in orbit, that power sure ain't free.
As a side note, I don't understand why I keep seeing these wrong arguments on HN repeatedly. Like everything mentioned in this thread can easily be fact checked. Radiative cooling is solved, launch costs are going down, so power costs will pay themselves back very quickly, etc.
You can argue about specifics, like chips will get more sophisticated + power efficient and fabrication will be the true longterm bottleneck, or SMRs/fusion could reduce energy bottlenecks, but talking about cooling as if convective cooling is the only option is just nonsensical.
This is emphatically not true at any scale in which this scheme makes sense. Be careful with including too many Musk boosters in your information diet.
"Just" is doing a lot of work there. SpaceX is planning to launch 100 GW of compute annually, that comes with ~ 2.5 square kilometers of radiator (assuming an optimistic 800K radiator temp and emissivity of 0.9, double sided)
Go for advanced carbon composites, you can do that with just 5,000 metrics tons or so of material. That's 34 starship launches just for the radiators. We haven't solved assembly, we haven't brought up power panels or core compute. Planned launch cadence that SpaceX hopes to reach end of this year: 12/year.
there is already a h100 in orbit
1GW of compute is a lot in 2026. comparing 100GW of annual compute to SpaceX 2026 goals does not make sense
if Starship launch cost predictions are accurate, data centers in space will happen within 10 years
1GW needs a pretty big area for radiation.
And in space your data centers is hard to defend against foreign actors
By that logic, climate change is also solved, just built a giant radiator.
Suns energy at ISS is about 1.4KW/m2 Solar panels about 35% efficient but let’s say 50% for fun
700w/m2, or about one H100 worth per sq metre (hey, I could run my own H100 off a roof top panel !!)
We want a small 70MW data centre - which is 100,000 times the size so 100,000 m2 or an array 316mx316m or 15 football pitches
Then as it’s energy in and energy out you need radiators on dark side of same size
The ISS is ~ 2000m2, so that’s fifty ISSes
I mean it’s physically possible. But the engineering, the space launch costs they are staggering. And the upside is … Im not sure
All the win seems to be is free sun energy, but a data centre in Texas or Nigeria just needs about twice the solar panels and some big ass batteries.
Im not costing that out but, honestly it seems like a marketing pitch or a really obscure need to put compute beyond the reach of governments.
Are you arguing that all this is technically possible or something? The whole point is that the costs would dwarf the gains.
> You are right that they can't be serviced, but that is missing the point of orbital data centers.
Pointing out a downside of something isn't ever "missing the point".
> The whole point is that you can build hundreds of thousands of these in a factory
In an Earth-based factory, right? Am I to understand that we can't build hundreds of thousands of regular Earth-based datacenters in a factory?
> and launch them in a scalable manner.
Wanna bet that launching something to space will always be a few orders of magnitude more expensive than shipping it somewhere across the planet?
> The power, cooling, etc. comes for "free".
Unlike on Earth, where you pay for sunshine? Or is cooling "free" in space but not on Earth? Lol?
> In the long run, as the cost of the chip, launches, etc. goes down, orbital data centers will scale better terrestrial ones.
The costs of the chips will get lower in space than on Earth?
The costs of launches will, again, become cheaper than terrestial transport?
> As a side note, I don't understand why I keep seeing these wrong arguments on HN repeatedly. Like everything mentioned in this thread can easily be fact checked. Radiative cooling is solved, launch costs are going down, so power costs will pay themselves back very quickly, etc.
The question isn't whether this is physically possible, but why you'd want to do it instead of an Earth-based datacenter. It's all downsides basically.
How is this not true for terrestrial/ocean deployment as well? It will ALWAYS be easier to shed heat on Earth than it will be in orbit. Convection, conduction, radiation... in space, you only get the last one.
So take the same unattended hardware you were going to launch into orbit, and put it on a container ship instead. You'll be better off in every way. If it makes you feel better, lie and tell everyone that you launched it into space. Building orbit-capable data centers might make sense, but actually launching them never will.
Sooner or later it's going to leak.
Corrosion indeed is always a problem.
1. pressure may compromise the electronics
2. water pressure increases very rapidly with depth. You'd have to pressurize the data center with a liquid with the same density
3. even a small differential will produce leaks
Increasing the temperature of the earth , and water usage are two things that using Space data centers will excel vs the alternatives. However society has just not been able to price that directly into these huge buildings.
Funny that I agree with EM idea on this, but the reasons are so far away.
I used to be open minded too but lost all sense of credibility in anything Elon Musk touches when he called nanotechnology a pseudoscience. Since then it's only been downhill. One does not have to be subject matter expert, even China is vertically landing rockets now.
For the idea to make sense I think you have to project forward some years to launches being cheaper and compute demand outrunning the energy grid.
I'm bullish on SpaceX as a company in terms of technical accomplishment.
Buying SPCX would make sense at about 1/4 of its IPO price. The IPO price and subsequent rise was inflated via hype and artificial supply restriction, i.e. publicly selling just 4% of the total company ownership.
Affordable is a bit questionable. It's heavily subsidized by Starlink and government.
Not completely clear what happens to price if SpaceX doesn't keep launch demand propped up with their own business.
Many companies have tried to launch LEO space-based communications constellations, starting with Iridium 30 years ago. Starlink is first and only so far to succeed at scale and provide truly global internet access. Indeed having the space launch and communications business joint has helped both of them. Indeed that helped SpaceX drive down launch costs, given their reusability and economies of scale. Having two very successful business lines integrated and synergistic seems like a massive plus, so I guess don't see the concern about the Starlink part of the business "propping up" the space launch part of the business.
Without Starlink, they would need to charge government launches much higher.
Starlink has really fast asset depreciation at ~5 years as well as competition from ever expanding terrestrial wireless (5G NR)
I wonder if that's what's happening with ~$1T of stocks currently locked up...
I spent a week researching this talking to fidelity, schwab, IBKR, and Robinhood, none would allow it.
Which more or less answered the question for me, even if he was being a bit hyperbolic.
Once the lockup expire they'll be able to trade (sometimes there's trading window but some tech company don't have any for lower level employees), and they'll still be insiders.
Shorters are selling to willing buyers at the current fair market price. So that they may survive.
When you own stock at a broker in a margin account, you may sign an agreement to allow the broker to lend out your stock to someone else. For lending your stock, you are entitled to a stock-borrow fee which usually is quite small say 0.25%, and paid by the borrower (short-seller). The borrower then sells the stock to someone else. At a later point, the short seller closes their position by buying it back, and returning it to you. This is roughly the mechanics of it. So, to answer your question, the short seller makes money from folks who buy high and sell low. In this specific example, the stock-borrow fee say was 5% because, the float is still low, and if the short seller borrowed at $165 after the IPO and sold it, and then bought it back at $135 and closed their position, they made money from folks who bought at $165 and sold at $135.
I do think they have deeper pockets because they are more informed/sophisticated players, so the whole argument is kind of circular.
Completely wrong, my claim is that people who have deeper pockets they do so for a reason.
Sometime later, the stock has fallen and you decide to close the position. You buy back the shares with the borrowed money probably from a market maker and close your position. You give the shares you borrowed back to the lender. Your net profit is sell_price - buy_price - borrow_fees, anything left is your profit.
Stocks are not zero sum like options or futures, they also have no expiration date (unlike derivatives), it’s possible a short seller sold shares to someone who later profited, and then it’s also possible to buy the shares from someone who profited, even if you made a profit on shorting the stock.
So the answer is “other market participants” who also may have profited on their buy or sell.
It's also possible Bob's thesis on SpaceX could have been wrong and the shares could skyrocket. There's usually a provision in the contract for Alice to recall the shares she lent to Bob. In this case, Bob would be forced to buy SpaceX stock at the current market value and likely lose money on the overall trade.
To answer your specific question, "Who do you make money from?" It's actually not clear. Bob selling-high and buying-low doesn't necessarily mean whom Bob sells-to and whom he buys-from are on losing sides of the trade despite Bob making a profit. E.g. the buyer of Bob's short-sell could write calls and the stock could close pass the strike on expiration and turn a small profit as well.
The money being made from SpaceX is money that Musk, or whoever, engineered to be lost from every pension fund that invests in Nasdaq-100; and the Nasdaq appear to have been entirely complicit, changing the rules to make it happen.
I mean Trump stole in the traditional way, using insider dealing, and going to war to manipulate markets. I guess Musk had to one-up him by getting an index itself to forcibly extract money from investors to give to him.
Not sure what his play is at this point, he can't be shorting his own stock, can he?
all you owe is the number of shares you sold, the original owner doesnt care what happened as long as they get identical ones back eventually. In the meantime, you pay interest on the initial value of what you borrowed and sold
You just sit on the cash
later when the shares are cheaper, you buy shares on the open market and give them back to the person you borrowed from
whatever cash is leftover from rebuying is your profit
2) sell it
3) rebuy it at the lower price (assuming you're right)
4) give it back to whomever you borrowed it from plus a consideration for letting you hold what's theirs for a bit
Whatever's left after you return the stock and pay the interest is your profit, which comes from the people who bought it from you in step 2. If you're wrong, and the price goes up, you have to replace the stock you borrowed at a higher price than you got for it and that's your loss (which could potentially be infinite, as opposed to long positions where you can only lose what you initially invested)
Also worth mentioning you might be on the hook to buy it back at any time; after all, the person you borrowed it from may themselves wish to sell it. If widespread, this is the basis of "short squeezes" (e.g. of GameStop fame/infamy), if a lot of short sellers are trying to buy it back at the same time
If market opens at significantly different price, you may be forced to liquidate and loose more than expected.
One call option in the US equity market gives you the option to purchase 100 shares of the underlying stock at the strike price.
Let’s say you want to limit the downside (upside since we’re short) risk of your short position and you’ve sold 100 shares short at $100.
You can buy a call option with with a strike price of $110 that gives you the option to buy 100 shares of stock at $110 a share, which limits your upside risk to $1000 plus the cost of the option, which let’s say in this case it expires in 90 days and costs $300 or $3/share.
If 90 days pass and the stock a trading at $120/share, you will have an open short position showing a loss of $2000, but you can ‘exercise’ the call option to purchase 100 shares at $110/share which you return to the person you borrowed them from and closes out your short position with a $1000 loss, for a total loss of -$1300, including the $300 the option costs.
If it is trading at $80 a share after 90 days, you buy back the shares at $80 each and return them, closing out your short position with a $2000 gain, for a total gain of $1700 after subtracting the $300 cost of the option, which expires with a vale of $0 since the share price is under the strike price of the option.
You can hedge a long position with put options, it’s just the inverse of what I described. If you buy 100 shares of stock at $100/share while simultaneously buying a $100 strike put option, your downside risk is limited to the cost of the put option. If the put costs $500 (or $5/share) that is all you can ever lose as long as you exercise the put option to sell the stock for $100/share if the stock price is below $100 when the option expires.
Which is the type of order you meant, not a limit order.
Short selling - sell high, buy low, pocket the difference.
The money is coming from the same place in both cases - other people in the market.
You don't actually take the money right away but a broker holds it for you.
Say Acme is worth 100$ today and you think it'll go down to 80$ in a week. You give the broker a small betting fee. So you give him 101$, he makes the purchase and holds the "position" for you.
During that week the price could do 2 things.
The Good Scenario: Price goes down to 80$. Broker buys the stock at 80$ and pockets a nice shiny 1$. You pocket 20$.
The Bad Scenario: Price goes up to 120$. Broker buys the stock at 120$ and pockets a nice shiny 1$. You owe broker 21$.
I say 1$ but it's actually more complicated than that. Some brokers allow you to do short positions only if you have other stock with them as collateral which they would sell to pay for whatever loss you might have. Shorting is a risky business because shares could go up to infinity and you could lose everything with these positions.
When people say they're "long on this stock" means they think it'll go up in price. "short on this stock" means they think it'll godown in price. It's lingo they love to use.
So the people you make it from are from people betting the opposite as you. Another person could make the opposite bet as you and end up losing their money that you pocket.
as in, you give back _a_ share not the same share.
So you buy a bunch of shares at x price, you agree to hand them back in n days time.
You make money by selling the shares immediately and then you buy shares later at a lower price, then when you hand back the shares, the profit is the difference between ho much you sold them for, and how much you bought them back again.
The risk is, you _have_ to give the shares back usually at a fixed point in time. So if the price rises, you have to pay the difference. (there is normally a fee as well, to borrow the shares.)
The funniest and simplest answer is that you make money off yourself.
There are two big issues with shorting a stock. One, your downside is infinite, whereas your upside is only the size of your position. If you short a medical stock worth ten cents and it zooms up to $1000 because the company discovers a cure for cancer, that's going to cost you $999.90 for every share you shorted at ten cents. If the company goes bankrupt instead, you make... ten cents for every share. If you get unlucky a single short position will wipe out all the money you made or will make shorting stocks for the next three generations.
The second problem is you don't completely control your position. If you buy a stock to hold, it's yours until you decide to sell. But when you short a stock and enough the people at your brokerage holding shares in a company you shorted decide to sell, your broker will summarily close your position at the current market price because there aren't enough remaining shares for you to keep borrowing. That can be very frustrating if the stock is at a temporary peak, especially if it proceeds to go down to a price for which you would have closed at a profit.
EDIT: I suppose I should add a third problem to the list. If the cost of your short goes beyond a certain percentage of your account your broker will close your position to protect himself and his other customers. That usually happens if the stock is going up quickly. When your broker closes your position, he, along with all the other brokers closing short positions, needs to buy stock, which creates a positive feedback loop. That's called a "short squeeze". You can end up with prices shooting up to ridiculous levels because people have no choice but to buy.
https://news.ycombinator.com/item?id=48933344 - "SpaceX stock erases all its gains and slides below IPO price in intraday trading" - latimes.com | 306 points | 1 day ago | 281 comments
https://news.ycombinator.com/item?id=48920181 - "SpaceX bond worth 10% less than issue price – heading for junk bond status" - ft.com | 561 points | 2 days ago | 603 comments
His EV was successful, his social media/AI OK but his space data center will fail and from now on he sells hype, a very fancy, trendy, sexy -name it- and expensive hype. Laws of physics don't allow it to be viable. We have a joke that originally applied to politicians and now to him: you can fool one for a long time, you can fool many for a short time, but you can't fool many for a long time.
how can that be healthy for civilization
It's actually more like 1 trillion of value was "lost" when the stock dropped, and $9 billion was gained by some (and equivalently lost from others) for being right about the stock dropping.
Stock dropping is not literally a loss of any underlying good. It is a "assessment of how valuable something is". So when we say "omg we lost $1t in value" is not quite right. It's "we (everyone betting in the stock market) now collectively understand the value of this thing (company in this case) to be $1t less than assumed previously"
In this case, massive swings in value mean that the assessed value of a thing is very uncertain. I'd say this is extremely true for spacex, where in theory many people think it could be worth a fortune, or nothing, and no one can ever know the "true" value.
This is because there is not such thing as "absolute value" in the real world. And when it comes to things like stocks, "value" is just "hypothesized current value", which is a whole bunch of things combined: long term value of company, plus short term expected movement, even things like "who wants to own more of this this in the next few milliseconds", make up what a thing is estimated to be worth right now.
Assuming the stock market is some oracle of absolute value will make the world look insane. Seeing it as estimated value at one point in time in a very uncertain world where nothing has "true" value and all value is just relations between people and the things they want and the things they own and can exchange, is much closer to reality.
Now debt is money from nothing...