Also, highly related with significant discussion in the past 2 days:

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

The person you sold it to after borrowing it, who paid for it at the elevated price.

Someone who bought and expected to make a profit, but reached a point where they hit their stop loss or just wanted to get out the trade at any cost and couldn’t bear to wait longer. Quite possible a redditor who frequents r/wallstreetbets and YOLOed in.

The buyer of your short sale would lose money to you. Remember options are contracts between two parties.

Shorters are selling to willing buyers at the current fair market price. So that they may survive.

It's still just "buy low, sell high". You make the money from the same folks you normally would, only the order of when you buy and sell is swapped.

> who do you make money from?

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.

The market just redistributes wealth from less informed players to more sophisticated/informed ones.

When you short a stock, you borrow shares from someone who is holding that stock and their broker gets money for lending the shares and sometimes the holder of the shares lent out gets money. You sell the shares, probably to a market maker. The cash is credited to your account and held as collateral.

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.

Alice holds SpaceX stock and believes it will rise. Bob believes the stock will fall. Alice and Bob reach an agreement for Alice to "lend" their SpaceX stock to Bob for a small "fee". Bob immediately sells the SpaceX stock at the current market value. After some time Bob will buy back the sold SpaceX stock at the current market value (hopefully less than Bob sold it for) and return the "borrowed" SpaceX stock to Alice thereby fulfilling the original contract.

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.

you borrow shares from a permabull and immediately sell them to whatever is buying

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

1) borrow the stock

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)

Keep in mind that unlike purchasing a stock where the most amount of money you can lose is the amount of money you spend buying the stock (assuming you didn't buy it on margin), if you directly short a stock, there's technically no limit to the amount of money you could lose. If a stock goes up 1000% after you short it, then you could lose far more money than you put into it.

From people who bought the stock when you started to short.

Normal sale - buy low, sell high, pocket the difference

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.

They're selling a borrowed stock, so any buyer on the market when you open the short position is where the money comes from. Short sellers get the money immediately and then pay fees to the people they borrowed from until they close the short position.

Exactly the same people you'd make money from if you sold the stock high and bought it low (ending up with the same amount of the stock)

You essentially purchase a share into the stock from a random person and sell it immediately on the market at the current price with a promise to sell it future value in the future.

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.

The key word is "fungibility"

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.)

This is actually a very good question.

The funniest and simplest answer is that you make money off yourself.

Options/futures market makers

That’s almost always prohibited.

You don't "short the stock" by taking a loan secured by it.

That would be a crime.

What happens if you get margin called in this scenario?

If anyone knows of a broker who will let you withdraw the proceeds (cash) of a short sale, I will buy the name of the broker off you. I'll also let you know why I would pay for this (although you may already know anyway, hah).

I spent a week researching this talking to fidelity, schwab, IBKR, and Robinhood, none would allow it.

Insiders aren't allowed to short a stock. It's against the law.

It's not created out of no where. It's traders saying that the stock is over priced and putting their money where their mouth is and taking on a big risk if they're wrong. They're extracting this money from folks that are putting upwards pressure on the stock saying it should be worth more. They're helping price the stock more efficiency and reducing index trader's expose to an overpriced stock e.g. retirement funds.

Those $9B are created the same way as when the stock would have risen. That's how most of the wealth in the stock market is created nowadays.

$9 Billion was not created, just exchanged, with some intermediary institutions and people making money for facilitating the transactions.

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.

Repairability and depreciation are the main problems. A earth data center can be repaired, depreciated, and recycled at EoL recovering some of the costs. SpaceX datacenters are a total write off from the moment they are launched.

SPCX is valued as an AI company; any and all issues you have with AI company valuations apply to to SPCX.

I too agree that SPCX’s space business is real and valuable, but it’s (almost completely) irrelevant here.

No. It really is a scam. Everyone with understanding of the physics involved wrote so. Heat dissipation + radiation + launch cost make it a no-go.

> Is there anyone credible who thinks this is a plausible pathway for SpaceX to make huge amounts of profit?

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 perusing, but its important to note that his expertise is space tech, and not business strategy.

Let's just put it this way:

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.

The only way it makes sense is if you think the massive job losses due to AI will lead to people burning down datacenters on earth. An older spec'd and unmaintainable datacenter is worth way more than one in ashes.

Richard Campbell did a great talk at NDC a month about about this - https://www.youtube.com/watch?v=eo7MEPgWGic

> It will soon restore the heavy launch capability

Maybe!

>but in an affordable

Maaybe!

>and sustainable

Maaaaaaybe. Gotta start gigantic scale methane production from solar or whatever first.

We sometimes get in the habit of thinking Elon, who is a Nazi, accomplishes everything he sets out to do, since he was so incredibly effective at getting EVs going and getting the Falcon 9 going. But he has plenty of misses too, like ruining the foundations of democracy, being over 12 years late and counting with self driving cars, hyperloop, the cybertruck, etc.