From Coinpedia · By Steve Muchoki
Story HighlightsTesla stock is down 3.32% in after-hours trading following flat revenue, a 43% slash in net income, and an EV production backlog.
Investors are highly wary of the merger with SpaceX due to its capital intensity, regulatory hurdles, historical failures of similar mergers, and national security concerns.
Analysts still give TSLA stock a Buy rating, with a price target of $402.
Tesla (Nasdaq: TSLA) stock has tanked 3.32% in the after hours to trade at $373.65 following a mixed Q3 earnings call and skepticism over merger talks with aerospace company SpaceX.
Source: MarketWatch
Tesla Q3 2026 earnings report: financial metrics
The electric vehicle (EV) manufacturing company reported flat year-over-year revenue at $28.05 billion, missing Wall Street consensus of $28.3 billion to $28.13 billion.
Additionally, its net income fell 43% year-over-year to $787 million or $0.22 per share. This proved that heavy research and development (R&D) allocations to AI and robotics were significantly depressing profits.
Income was also affected by the loss of the $7,500 federal EV tax credits, causing sales to slump nearly 20% year-over-year. Tesla normally sells off these carbon credits at at least 100% profit since it doesn’t require that many.
Nonetheless, the adjusted earnings per share (EPS) reached $0.48 per share, beating the consensus of $0.44 to $0.45.
Even more, free cash flow reached $1.53 billion, dramatically exceeding Wall Street’s negative expectations of between -$4.5 and -$4.9 billion. Automotive gross margin also rebounded from 16.3% in the previous quarter to 18.1%.
Operational and strategic highlights
Tesla delivered 486,532 EVs in Q3, which beat Bloomberg estimates of 463,000, but represented a 2% year-over-year decline. The downscaling also represented the highest production backlog in four years, and was mainly attributed to battery supply constraints.
Full Self-Driving (FSD) subscriptions increased by 20% in the quarter, and served 75% of new Tesla EVs in North America.
Capital expenditures (CapEx) fell to $4.73 billion, as compared to the previous quarter’s $5.8 billion. These funds were directed towards artificial intelligence (AI), robotics, the Cybercab robotaxi, and the Terafab chip plant being built in conjunction with SpaceX. The expense-cutting strategy also spanned its full-year CapEx guidance, with Tesla lowering estimates from $25 billion to $20 billion.
Tesla – SpaceX merger talks
On Tuesday, Tesla CEO Elon Musk confirmed that there were special committees exploring a potential merger between it and SpaceX. The deal would represent the largest corporate merger in history, but it requires a 50% vote from all Tesla shareholders.