Actually, in that case while he may have his passport revoked, more would be required to for citizenship to be forfeited. There are many who are citizens who don't hold valid passports.
Though the conditional nature of your statement begs the question: to obtain a passport he would have needed to submit documentation attesting he was a citizen. Obviously, the passport agency found the documentation submitted to be valid.
You are confusing and conflating wholly different reasons for the revocation of a U.S. Passport. The U.S. Supreme Court struck down statutes which caused the loss of U.S. citizenship due to acts of expatriation and failures to satisfy residency requirements, so the statutes for Immigration and Naturalization were revised to reflect those U.S. Supreme Court decisions. Revocation of a U.S. Passport due to fraudulent misrepresentations of material fact is unrelated to the expatriation ruled upon by the U.S. Supreme Court and remains very much in effect today. Recent examples of such revocations of a U.S. Passport include the former NAZI war criminals. In the case of Ted Cruz the quoted statute clearly requires the father to have naturalized as a U.S. citizen before the child could qualify for automatic U.S. citizenship to be transmitted from a U.S. citizen mother. Ted Cruz is therefore not a U.S. citizen, naturalized or natural born, unless he naturalized as a U.S. citizen after reaching the age of majority.