Why SpaceX Stock Crashed After Earnings

Elon Musk was wrong.

Ahead of the Space Exploration Technologies (NASDAQ: SPCX) earnings report yesterday evening, the company CEO took to Twitter (er, "X") to warn investors against shorting SpaceX stock.

But then the earnings came out.

And as of 9:45 a.m. ET, SpaceX stock is already down 10.4%.

SpaceX Q2 earnings by the numbers

Was Elon Musk bluffing? Perhaps. But the earnings news wasn't entirely bad, either. The company's $0.09-per-share loss was better than the $0.34-per-share loss it reported in Q2 last year. It was also better than the $0.29-per-share loss analysts expected. Revenue of $7.8 billion was significantly more than the $6.8 billion analysts had projected.

That said, not all the news was good.

While SpaceX accentuated the positive aspects of its quarter -- 92% revenue growth year over year, quarterly losses cut nearly in half -- investors appeared to zero in on the negatives:

"Connectivity" -- the business better known as Starlink, and the only profitable part of SpaceX -- sales grew less than 66%. "Space" revenue -- the business that gave SpaceX its name -- grew only 29% year over year. " Most of the revenue growth the company enjoyed came from the AI business that combines the Grok and X. AI sales grew 248% year over year, but scaling up the business didn't turn it profitable, and losses declined only 18% year over year.

SpaceX's worst news: Free cash flow

Worst of all, and probably most concerning to investors, SpaceX burned through $16 billion in cash in Q2 -- nearly twice the $9 billion it burned in Q1, bringing cash burn year to date up to $25 billion, and putting SpaceX on course to burn $50 billion this year.

If that's the reason investors are selling today, I cannot blame them.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.