Why Goldman Sachs & Morgan Stanley are Short SpaceX

Morgan Stanley and all of the book runners on the SpaceX IPO. They stand to make a ton of money if the SpaceX share price drops below the IPO price of $135. And I know that sounds crazy, but this is actually a pretty typical feature of an IPO. So here's the thing. We were all told that the SpaceX IPO was a $75 billion dollar offering. Guess what? Goldman, Morgan, all of those banks, they actually went out to the market and they sold $85 billion dollars worth of stock. $85 billion dollars worth of stock. What happens next is over the next 30 days, if the share price of SpaceX drops below the $135 offer price, all of those book runners, because they're basically short, need to go out into the market and buy SpaceX shares to put upward pressure on the stock. That is how they're acting as a stabilizing agent. They become buyers in the event of the share price going down. However, if the share price does well, then they have the option from SpaceX to exercise the greenshoe, which is this over allotment option. And so they actually don't have to go to the market to buy that back. And so the end result is that if the share price does well, greenshoe exercise, they don't have to buy anything if the share price does poorly. They've sold at $135 and they're buying at a lower price. So they would stand to make money if the share price does poorly.