SpaceX Will Release Earnings Through X and Its Website Only. Is That a Red Flag?

SpaceX (NASDAQ: SPCX) held what was, for now, the largest initial public offering (IPO) in history. The event was headline-grabbing news for months before the IPO, as the world watched to see what would happen. The stock rose smartly, as many had hoped. But CEO Elon Musk has a habit of pushing the boundaries, and he isn't done yet with SpaceX.

What should investors make of the decision to release earnings through only the company's website and Elon Musk-owned X?

The normal way things are done

When a publicly traded company reports earnings, it normally does three things with the information. As you would expect, it files a quarterly report with the SEC, known as a 10-Q. Companies also post earnings announcements on their websites, offering an easier-to-digest overview of what is in the 10-Q. That same information is typically sent over a newswire, allowing it to be disseminated more broadly.

Elon Musk intends to change that system with SpaceX, which is a leader in the space industry. The first two steps will continue as usual, but the newswire will be replaced by X. X, formerly known as Twitter, is privately owned by Elon Musk. It is often seen as a "town square" where people can share information and opinions. However, it is increasingly a way for news to be quickly disseminated. Elon Musk is, basically, pushing the boundaries again as he shifts from an old model to a new one.

Is Elon Musk trying to boost his own business?

The effect of this change won't likely be material for investors. News outlets will still cover the earnings release, and investors shouldn't have any trouble finding the information. That said, SpaceX won't have to pay a fee to use a newswire service and, at the same time, it will boost the prominence of Musk-owned X. You could easily argue that there's a bit of business conflict there, but it doesn't appear like anything illegal is happening. It is just a shift from tradition.

The real question is what will other companies do now that Elon Musk has broken with tradition? If other companies follow SpaceX's lead, X could become an increasingly important communications tool in the business world. And, in turn, traditional newswire services could find themselves losing share in a business that has long been a stronghold. If you invest in companies like Thomson Reuters (NASDAQ: TRI), you may want to pay close attention to this boundary-pushing SpaceX decision.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Thomson Reuters. The Motley Fool has a disclosure policy.