HOUSTON, July 23 -- Elon Musk went to X on Wednesday to deliver a message to the traders betting his rocket company would keep falling. Their survival probability, he wrote, was very low.

The post came as SpaceX shares hovered more than 5 percent below the $125 IPO price set last month, a slide that has handed an estimated $8.7 billion in mark-to-market gains to the short sellers who assembled positions during the offering, per Reuters. With roughly 32 percent of SpaceX's float now sold short, one of the highest concentrations of bearish institutional conviction attached to a newly public company in recent years, the stage is set for a confrontation Musk has won before.

SpaceX priced on June 12 at $125 per share, raising roughly $6 bill...