SpaceX’s First Earnings Report Was Better News for Rocket Lab Than SpaceX

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In May of 2019, Tesla (TSLA) was a $12 stock (split-adjusted).

The company had just bled roughly $1 billion of cash in a single quarter – the latest installment in a free-cash-flow bonfire that had consumed some $24 billion since 2011. And after a furious Model 3 production ramp in late 2018, Wall Street took the early ‘19 delivery slump as a harbinger of doom. 

Yet, beneath all the noise, the machine kept whirring. Deliveries were scaling. Gigafactory Shanghai came online, with the first production vehicles rolling out less than a year after breaking ground. Tesla’s stock was falling, but its technology lead kept growing.

Here’s what I wrote in June 2019: 

“All in all, not only is the Tesla growth narrative far from dead, but it’s about to get a lot better. As it does, I wouldn’t be surprised to see TSLA stock rally back towards $300.”

You know what happened next. 

Within two years, TSLA stock rallied more than 20-fold, and the people who got paid weren’t the ones who were right about the quarter. They were the ones who were right about the decade.

I bring this up because we just watched Elon Musk report earnings twice in two weeks – once at Tesla, and once at the newly public SpaceX (SPCX). 

Both reports carried the exact same growth profile: explosive top-line growth, ugly bottom-line optics, gargantuan capex, and a market of investors who can’t decide whether they’re looking at a money pit or the ground floor of an empire.

Let’s break down both – and, more importantly, let’s talk about where I think the real torque is hiding.

Tesla Earnings Show the Musk Reinvestment Blueprint

Tesla’s second-quarter report on July 22 was like a study in contradiction.

The top line was a monster. Revenue hit a record $28.2 billion, up 26% year-over-year – the company’s first real growth inflection in over a year – on a Q2-record 480,126 vehicle deliveries that blew past estimates. Energy storage deployments jumped more than 40% to 13.5 gigawatt-hours. Services revenue surged 50% to record profitability. And Tesla crossed $100 billion in trailing-twelve-month revenue for the first time in its history.

Meanwhile, the bottom line? A mess. Operating income cratered 57% to just $398 million, compressing operating margins to a razor-thin 1.4%. Adjusted EPS of $0.33 badly missed the ~$0.51 consensus. Regulatory credits – once a reliable profit cushion – collapsed to $146 million from $439 million a year ago. Capex exploded 142% to $5.8 billion, and free cash flow swung negative by about $1.1 billion.

So, which is it: a broken profit engine, or a company reinvesting everything into what comes next?

Look at where the money went: Cybercab production starting at Giga Texas. Robotaxi operations now live in seven metro areas. First-generation Optimus production lines being installed. AI infrastructure spend ramping across the board. Tesla isn’t losing its profitability. It’s spending its profitability – aggressively and all at once – to fund the Physical AI era.

Sound familiar? It should. Because Musk’s other trillion-dollar company just did the exact same thing.

SpaceX Earnings: 92% Growth and an $18.4 Billion Spending Bill

SpaceX’s first earnings report as a public company was, directionally speaking, everything the bulls could have asked for.

Revenue surged 92% year-over-year to $7.8 billion. Adjusted EBITDA nearly tripled to $3.5 billion. Starlink subscribers doubled to 12 million. Enterprise and government connectivity revenue jumped 108%, and Starshield locked in more than $6 billion of new contracts.

But the showstopper was AI. SpaceX’s AI revenue soared 247% to $2.6 billion, and the segment swung to $1.1 billion of positive adjusted EBITDA. Management has already signed another $6.7 billion of cloud business in Q3, with new compute investments paying back in under a year. The company expects compute capacity to exceed 2 gigawatts this year and approach 10 gigawatts by the end of 2027.

The integrated space-connectivity-AI flywheel isn’t a slide-deck fantasy anymore. This quarter put real numbers behind it.

Now, was it a clean “all clear” for the stock? No. SpaceX spent a staggering $18.4 billion in the quarter – $15.8 billion of it on AI – and expects similarly elevated capex for at least two more quarters. The company is still GAAP-loss-making. Some of those shiny cloud contracts contain easy exit clauses. And a looming insider-share unlock hangs over a stock that has been in free fall since its IPO.

In other words, SPCX has the same fingerprint as TSLA – enormous growth, enormous spend, and near-term optics ugly enough to keep the tourists away.

SPCX Stock Is a Time-Horizon Trade

On a six-to-12-month horizon, these are frustrating stocks. Cash-flow optics are ugly. Execution risk is extreme. Every headline is a landmine. There are probably better places for short-term investors to park their money.

Now, on a five-to-10-year horizon, this is exactly what empire-building looks like. Tesla in 2019 looked like a cash bonfire right up until it looked like the best trade of the decade. Musk’s companies have always traded today’s income statement for tomorrow’s market position – and history has, so far, rewarded the patient side of that trade.

Your outlook on TSLA and SPCX will depend almost entirely on which of those two investors you are.

But here’s the thing. I’m actually less interested in what SpaceX’s report said about SpaceX and far more interested in what it said about everyone else.