Yesterday brought two of the week's most important earnings reports, from two Wall Street giants that could hardly be more different.
On one side, Netflix. TV shows, movies, and subscriptions. On the other, SpaceX. Rockets, satellites, and... artificial intelligence.
Both companies reported earnings per share above analysts' expectations. And yet, the market reacted to them in completely different ways. Netflix shares fell, while SpaceX shares rose.
Netflix Earnings
Let's start with Netflix. Earnings per share came in at $0.87, compared with analysts' expectations of $0.82. Revenue reached $12.87 billion, exactly in line with expectations.
Revenue increased by 12% compared with the same period last year. What drove the growth? New subscribers and the price increases introduced in March. Netflix says subscribers responded to the price hikes exactly as expected. Customers remained loyal across all regions, and cancellations declined compared with last year.
Net income reached $3.66 billion, up from $2.55 billion a year earlier. The company did point out that some of this increase was due to the timing of expenses throughout the year.
Operating income also rose 37% to $4.58 billion, beating analysts' expectations of $4.27 billion.
Of course, not everything is rosy. Revenue grew at its slowest rate in three years.
"If the company beat expectations, what's the problem?" you might ask.
Why Netflix Shares Fell
The problem is what comes next.
For the fourth quarter, Netflix expects revenue of $13.4 billion, representing 12% growth. Analysts were expecting slightly more, at 12.23%. And earnings per share? $0.67, compared with expectations of $0.73.
For the full year 2026, Netflix expects revenue of $51.1 billion. That's at the lower end of the range it provided in the previous quarter and slightly below Wall Street's forecast of $51.2 billion.
Then there's advertising. Netflix had expected to generate approximately $3 billion in advertising revenue this year. It now expects around $2.7 billion. Why? Some of its advertising tools are rolling out more slowly than anticipated.
But that's not all. Last week, the company announced it would lay off 6% of its workforce, approximately 1,000 people. Bela Bajaria is stepping down as head of content, with former Disney executive Peter Rice taking over the role.
Viewing hours have stalled, while competition from YouTube continues to grow. The company itself acknowledges that investors are concerned about the growth in viewing hours.
And as if that weren't enough, Netflix has also lost the battle to acquire Warner Bros. Discovery's streaming and studio businesses.
The result? Netflix shares fell by as much as 6% in after-hours trading. At one point, they reached $68.70, much closer to their 52-week low of $65.08 than their high of $124.86.
In fact, the stock has fallen following each of its last five earnings reports.
SpaceX's Explosive Growth
Now let's turn to the second company. SpaceX, which went public in June, delivered a completely different story.
Revenue reached $14.6 billion, up from $5.6 billion a year earlier. That's an increase of 161%.
Analysts had expected revenue of $13 billion. Earnings per share came in at $0.35, compared with expectations of $0.16.
Net income reached $4.4 billion, compared with a loss of $1.1 billion during the same period last year.
Operating income stood at $2.8 billion. Adjusted EBITDA, which measures earnings before interest, taxes, depreciation, and amortization, reached $8.8 billion, an increase of 306%.
But the most impressive performance came from artificial intelligence.
SpaceX calls this division Super Intelligence. It generated $7.6 billion in revenue, up 830% in just one year.
Yes, you read that correctly. EIGHT HUNDRED AND THIRTY PERCENT.
Where did this revenue come from? New deals for cloud computing services, Cursor, an AI-powered coding startup that SpaceX acquired during the quarter for $60 billion, and Grok, which is being used by a growing number of businesses and individual users.
What does this mean?
The company everyone knows for its rockets now generates more than half of its revenue from artificial intelligence.
Starlink and Starship
Despite the AI boom, Starlink is also performing strongly.
The satellite internet business generated $5.2 billion in revenue, up 69% from a year earlier.
Revenue from individual subscribers increased by 57%, while revenue from businesses and government customers climbed 91%. Operating income also rose 99%.
And things get even more interesting here.
SpaceX is acquiring 800 MHz of spectrum, while the US Federal Communications Commission (FCC) has approved a plan for 15,000 satellites.
In other words, Starlink is preparing to build its own mobile network in the United States.
The goal is to compete directly with the major mobile carriers. RBC analysts have set a price target of $225 and maintain a Buy rating.
What about the rockets?
The launch business generated $1.8 billion in revenue, with 12 launches for customers. Starship also completed its first revenue-generating mission.
It deployed 26 Starlink V3 satellites, providing approximately 10 times the capacity added by a typical Falcon 9 launch.
SpaceX shares rose around 2.3% in after-hours trading.
Of course, there's one big caveat.
Can SpaceX sustain this growth rate while investing so much money in computing power, new spacecraft, and additional satellites?
That's the question we will have to wait to see answered.