SpaceX short sellers are running out of bullets as stock rebounds more than 40% off low

Short sellers betting against SpaceX are rapidly retreating from the trade, just as the newly public stock rebounds from its post-IPO slump.

Short interest in SpaceX fell to about 11% of the company's publicly traded shares Wednesday, down sharply from a peak of 34% last week, according to S3 Partners. The decline reflects a combination of bearish investors closing out positions and a significant expansion of the stock's tradable float following the first major lockup expiration.

"Shorts that wanted to short are out of bullets," said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners. "Only so much money you can put into a trade."

The exodus came as SpaceX shares staged a sharp rebound from their post-earnings sell-off, with short covering potentially adding fuel to the advance. Investors closing bearish positions must buy back shares, which can amplify upward moves when a stock is already rallying.

Shares jumped 11% Wednesday to around $148, lifting the stock about 10% above its $135 initial public offering price and roughly 41% above its Aug. 3 low.