When Space Exploration Technologies (NASDAQ: SPCX) reported Q2 results earlier this month -- its first earnings report as a publicly traded company -- this triggered the first unlocking of SpaceX's shares after its June initial public offering (IPO), letting insiders sell as much as 20% of their SpaceX stock. Pundits predicted a wave of selling to hit SpaceX when that happened. (It didn't, but it still might. A further 7% of insider shares will unlock on the 70th day after the IPO -- Aug. 21).
This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia.
Continue » SpaceX stock fell after earnings -- down 13.6%. But it bounced right back the next day and has continued to climb in fits and starts and is approaching $150 (as of Aug. 17) The question is: Should investors have bought SpaceX stock after earnings? By some measures, SpaceX had a blowout Q2.
Quarterly sales rose 92% from a year earlier to $7.8 billion across the company's three big business divisions, and crushed analyst predictions of $6.8 billion. SpaceX didn't earn a profit, but the $0.09 per-share loss it reported was much better than the $0.29-per-share loss analysts expected. When you zoom in to examine SpaceX's business unit, by unit, however -- that's where the problems start to become visible.
Take Connectivity, for example. The business, better known as Starlink, expanded its satellite constellation past 10,000 units and doubled its subscriber count to 12 million. Revenue didn't double, however, growing only 66%, as most of Starlink's growth these days comes from foreign jurisdictions where SpaceX charges lower subscription fees.
The good news is that, with its costs largely fixed, even adding customers at discounted rates increased profit incrementally, so Connectivity's operating profit grew 79%. But do keep an eye on that subscriber growth/revenue growth divide. Or consider the space launch business that gave SpaceX its name.
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