Short Sellers Pile Into SpaceX, Novo Nordisk Sues Eli Lilly

**Zaid Admani** (0:00)
Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Wednesday, July 22nd. In today's episode, we'll break down why rising oil prices and new tariff threats are putting inflation back in focus. We'll also tell you why the next two weeks are going to be absolutely critical for SpaceX stock. Then stick around to the end of the show to find out why Kraft Heinz is partnering with Disney. We got a great show for you today.
Let's go.
Stocks bounced back on Tuesday thanks to a resurgence in chip stocks. The S&P 500 was up 0.9% yesterday, while the NASDAQ jumped 1.3%. And the SOX Semiconductor Index rallied more than 5% on Tuesday, which was its best day in a month. Some of the big winners include Xandis, Micron and Seagate, which all jumped more than 10%, while Intel and AMD were up more than 7%. So after weeks of getting crushed, investors finally started buying the chip dip yesterday ahead of tech earnings, which start tonight. Google and Tesla both report earnings after the market closed today. We'll recap those numbers on tomorrow's show, so definitely stay tuned for that. Now zooming out, the macro picture keeps getting messier. Oil prices keep climbing. Brent crude hit $95 a barrel for the first time in six weeks as the US striked Iran for the 11th straight day, and the Secretary of State Marco Rubio said that Iran is not serious about peace talks. But if that wasn't enough, tariffs are back in the picture. The Trump administration is reportedly preparing a new round of tariffs on dozens of countries before Friday when the current temporary 10% global tariff will expire. We'll fill you guys in as we get more information on that. But yeah, between the oil price resurgence and the new round of tariffs coming up, I mean, that's gonna lead to higher inflation pressure building at the same time. And you know, it's a reminder of how quickly the market narrative can change. Just a couple of weeks ago, investors were feeling great about cooling inflation and oil prices were like in the 70 to $80 range, and nobody was thinking about tariffs. And now both those risks are coming back at the same time. And that could impact what the Fed does with interest rates. Right now, the markets are pricing in a 25% chance of Fed hike next week and a nearly 70% chance of a rate hike at the September Fed meeting. So yeah, there is a lot going on in the markets right now. We are staying on top of everything. So if you're a new listener, it is a great time to get subscribed to the podcast and tune in every day to stay in the loop.
Let's run through some headlines. Starting with SpaceX. SpaceX stock has had a rough stretch as of late. Shares had dropped for seven days in a row until yesterday when that losing streak finally snapped. But you know, overall, SpaceX has been one of the worst performing big IPOs over the last 15 years. The stock has dropped 23% in its first 27 days of trading, while a typical IPO over that stretch is basically flat. According to an analysis from Baron, SpaceX has performed worse than 90% of major US IPOs since 2009 So despite the initial hype, things haven't been so great lately. And things could get very interesting over the next couple weeks because the company just announced that their first earnings report as a public company will be on August 4th. And then just two days later on August 6th, up to 911 million shares will unlock. Now a quick refresher on how this works. When a company IPOs insiders and early investors are locked up, meaning they're banned from selling shares for a set period of time. So everyone just doesn't dump their stock on the first day. SpaceX set up a triggered lockup period that releases shares in waves. And August 6th is the first big wave. Now to put this into perspective right now, only about 693 million shares are trading publicly. So the pool of tradable SpaceX shares will more than double on August 6th. And then by early December, the tradable share account jumps to over 5 billion shares. And that has some investors worried that this is gonna add more selling pressure to the stock because many of these early SpaceX investors are sitting on absolutely massive gains and some may decide to cash out immediately. In fact, SpaceX has now become one of the most shorted stocks in the market. About 32% of SpaceX traded shares are now sold short. A month ago, that number was around 5%. This has caught Elon Musk's attention. He is firing back against the short sellers. He posted on X that the survival probability of people maintaining a significant short position on SpaceX over time is very low. So yeah, I think this August 4th earnings report from SpaceX might be the most important earnings of the quarter, maybe even the year. If these earnings disappoint and insiders start selling two days later, that could put a lot of selling pressure on the stock. But then on the flip side, if SpaceX reports strong earnings and the stock starts ripping, well, all those short sellers could be forced to buy back shares at the same time, creating a short squeeze and a pump in the stock price. Yeah, I think this first earnings report will be the first real test of SpaceX's valuation as a publicly traded company. Let's shift gears and talk about the weight loss drug wars, because Novo Nordisk is now suing Eli Lilly. Novo Nordisk filed a lawsuit in federal court yesterday, accusing Eli Lilly of misleading consumers with their ads, which compares their weight loss drug ZepBound to Novo Nordisk's weight loss drug WeGovVe. Since April of this year, Eli Lilly has been running ads saying that patients on ZepBound lost an average of 50 pounds compared to just 33 pounds for patients on WeGovVe. Those numbers are from a head-to-head clinical trial, but Novo Nordisk says that comparison is now outdated because that trial used WeGovVe's older 2.4 milligram dose. But earlier this year, the FDA approved a new, much higher 7.2 milligram dose of WeGovVe, and in a separate study, patients taking that version lost an average of around 47 pounds, basically neck and neck with Zepound. Now, Eli Lilly's defense is that head-to-head trials are the gold standard when it comes to comparisons. And as of right now, there's no head-to-head trial that exists for the new doses of Novo Nordisk's drug. To me, this just seems like Novo Nordisk having some sour grapes and trying to do whatever they can to fight back against Eli Lilly. Novo Nordisk had the lead in the weight loss space with Ozempik and WeGovVe a few years ago, but then Eli Lilly came out with ZetBound and Manjaro, which were better and they took the market from Novo Nordisk. As a result, Eli Lilly's stock has gone up 50% in the last 12 months, while Novo Nordisk has lost 24%. So I think Novo Nordisk is just frustrated that they fumbled the lead so bad, and now they're hitting the lawsuit button in hopes of slowing down Lilly.