Overview
Tesla
TSLA · NASDAQQ3 2026Automotive · Electric Vehicles, Energy Storage and Autonomy
Since the Report + 5.0%
Revenue fell 0.2% year over year, EPS beat the estimate by 9.1%; the stock fell 3.3% in its first reaction.
- RevenueQ3
- $28.05B
- Estimate $28.13B · 0.3% Below
- EPSAdjusted
- $0.48
- Estimate $0.44 · 9.1% Beat · YoY −4%
Verdict
BUYTesla's third-quarter revenue of $28.05 billion came in line with expectations, while adjusted EPS beat the estimate by 9.1%. Gross margin recovered to 19.6% and free cash flow turned positive at $1.53 billion; the stock rose after hours at first, then turned about 2% lower during the call. The next thing to watch is whether the 39% jump in operating expenses swallows the margin recovery.
Close on Report DayOct 21
$386.47▼ 3.3%Report-Day Move
- Market Cap(Today)
- ≈ $1.60 T
- 1Y Return(At Report)
- − 13%
- P/E(At Today's Price · $1.72 · Trailing 12M)
- 235.9
- Net Margin(Trailing 12M)
- 3.1%
Earnings Summary
In 30 Seconds- Revenue of $28.05B was in line with expectations, and adjusted EPS of $0.48 beat the estimate by 9.1%.
- Gross margin rose to 19.6%, but a 39% rise in operating expenses cut operating income by 56% year over year.
- The stock rose after hours at first, but fell to about 2% below the close during the call, where the capex target was cut.
The Numbers
Gross Margin
19.6%
Year Ago 18.0% · 1.6 Point Expansion
Operating Income
$718M
▼ 56% YoY · Operating Margin 2.6%
Free Cash Flow
$1.53B
Q2 −$1.09B · YoY −62%
Stock Reaction
▼ 3.3%
After-Hours Close 8:00 P.m. ET · Oct 21
Quarterly Revenue ($ Billion)
28.10
Q3 25 · $28.1 B
24.90
Q4 25 · $24.9 B · QoQ − 11.4%
22.39
Q1 26 · $22.4 B · QoQ − 10.1%
28.24
Q2 26 · $28.2 B · QoQ + 26.1%
28.05
Q3 26 · $28.0 B · QoQ − 0.7% · YoY − 0.2%
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
Q4 2026 Company Guidance
- Capex 202620 B
Prior Target Over $25B · $13.01B in 9 Months · No Revenue GuidanceCut ~20% ▼
Segment and KPI Data
Revenue by Segment
- Automotive$20.6 BShare 73.3%▼ 3.0% YoY
Includes regulatory credits and leasing
- Services and Other$4.61 BShare 16.4%▲ 32.5% YoY
- Energy Generation and Storage$2.88 BShare 10.3%▼ 15.6% YoY
Key Metrics
Deliveries
487 K vehicles
▼ 2.1% YoYShareholder Letter
Production
464 K vehicles
▲ 3.8% YoYShareholder Letter
Active FSD Subscriptions
1.74 M subscribers
▲ 67.0% YoYShareholder Letter
Storage Deployed
13.7 GWh
▲ 9.6% YoYShareholder Letter
Auto Gross Margin Ex-Credits
18.1%
Shareholder Letter
Operating Cash Flow
$6.26 B
▲ 0.4% YoYShareholder Letter
Vehicle Inventory
11 days
Shareholder Letter
Shares are computed over the segment total: $28.0 B. Source: Shareholder Letter.
Metrics come only from the company's own filings; each one names the document it was taken from.
“The Cybercab fleet in Austin, for example, has grown by a factor of 10 since launch about a month ago.”
- Cybercab Fleet Is Growing
- 5 Million Vehicles by 2030
- Capex Target Cut to $20B
Summary and Review
Summary
Tesla reported third-quarter revenue of $28.05 billion. Revenue was flat year over year and 0.3% below the $28.13 billion market expectation. That leaves the revenue gate in line. Adjusted EPS was $0.48, beating the $0.44 estimate by 9.1%; the earnings gate is open. The company gives no numeric guidance, so the third gate does not count. GAAP EPS fell 44% to $0.22. Most of the gap comes from stock-based compensation.
The stock closed at $386.47 and rose as much as 1.6% after hours following the release. The direction reversed during the call; as of 6:09 p.m. ET the price was about 2% below the close. The market first read this report as a cash story. Free cash flow turned positive at $1.53 billion, while the Bloomberg compilation had expected an outflow of about $4.9 billion. On the call, the full-year capex target was cut from more than $25 billion to about $20 billion.
The score is 70 and the view is buy. An in-line revenue gate and an open earnings gate map to the 70-79 band. Three caveats pull the score to the bottom of the band. Operating expenses rose 39% and operating margin fell from 5.8% to 2.6%. The energy segment lost revenue despite a record order backlog. Only 52% of the more-than-$25 billion annual capex plan was spent in nine months. The call cut it to about $20 billion, shifting some spending into 2027.
Full Review
Margin recovered, operating income halved.
Total gross margin was 19.6%. It was 16.8% the prior quarter and 18.0% a year ago. Automotive gross margin excluding regulatory credits rose to 18.1%. That figure was 16.3% in the second quarter and 15.4% a year ago. Regulatory credit revenue fell from $417 million to $113 million. So the margin gain came from vehicle sales, not credits. Even so, operating income fell 56% year over year to $718 million. Operating expenses rose 39% to $4.78 billion. Research and development alone rose 69% to $2.76 billion. Operating margin was 2.6%, versus 5.8% a year ago. The $1.35 billion rise in expenses outran the $440 million rise in gross profit. Expenses set the direction of profitability this quarter.
Services grew, energy shrank.
Automotive revenue was $20.56 billion, down 3% year over year. Deliveries fell 2% to 486,532 vehicles. Deliveries of other models, which cover Cybertruck, Semi, Model S and Model X, fell 48%. Services and other revenue rose 33% to $4.61 billion. Energy generation and storage revenue fell 16% to $2.88 billion. Yet deployments rose 10% to 13.7 GWh. The release does not explain why revenue and deployments moved in opposite directions. Energy gross margin rose to 33.1%, versus 31.4% a year ago. The company says it saw its highest-ever storage order rate and backlog. Megafactory Texas began production with a planned capacity of 50 GWh. The company expects data center demand to keep driving storage demand. On the call, management said 2027 Megapack supply is nearly sold out.
Cash turned positive, capex lags the plan.
Operating cash flow was $6.26 billion. Capital spending of $4.73 billion was more than double the year-ago level. Free cash flow was $1.53 billion, after negative $1.09 billion in the second quarter. Cash and short-term investments rose $1.9 billion in the quarter to $45.45 billion. The other side of the picture is the capex schedule. The company had guided to more than $25 billion of capex for the year. Spending in the first nine months was $13.01 billion. On the call, CFO Vaibhav Taneja cut that target to about $20 billion. That brings required fourth-quarter spending to about $7 billion. The company also has up to $30 billion of credit capacity. Capex also fell 18% from the second quarter. Part of the cash surprise comes from that slowdown. For more, see our cash flow guide.
Autonomy metrics picked up speed.
Active FSD subscriptions rose 67% year over year to 1.74 million. More than 75% of new deliveries in North America included FSD. That share rose nearly 20 points from the prior quarter. Cybercab began Robotaxi rides in Austin on September 3. Unsupervised Robotaxi miles grew eightfold in the quarter. Optimus entered production on high-volume lines in Fremont. Tesla Semi is in volume production in Nevada. The company plans to reach 400 MW of AI training compute by year end. These lines do not yet carry much revenue. They are the reason behind the 69% rise in R&D. Over time, the company expects software and fleet profits to join hardware profits. The first test of that view is Robotaxi's expansion to new cities. On the call, Musk said the Austin Cybercab fleet grew tenfold in about a month. He expects Robotaxi revenue to become noticeable in the second quarter of next year. Optimus deliveries to outside customers will come by the end of 2027.
Next quarter, watch the operating margin.
Next quarter, watch a single ratio: operating margin. It was 2.6% this quarter. If it rises above 4%, the gross margin recovery is keeping up with expenses. If it falls below 2%, R&D and capex are eating the margin. A result between those thresholds means the holding pattern continues. The second gauge is energy revenue. If the record backlog does not turn into revenue above $3 billion, order momentum is not reaching the top line. The third gauge is capex. Under the new target, fourth-quarter spending should be about $7 billion. If it falls short even of that, the plan is slipping into 2027. For a general method, see our guide on how to read earnings day.
Looking Ahead
Strengths and Risks
6 Strengths · 6 RisksStrengths
6- Adjusted EPS of $0.48 beat the market expectation by 9.1%.
- Automotive gross margin excluding credits rose 2.7 points year over year to 18.1%.
- Free cash flow turned positive at $1.53 billion after a negative second quarter.
- Services and other revenue rose 33% year over year to $4.61 billion.
- Active FSD subscriptions rose 67% year over year to 1.74 million.
- On the call, management said 2027 Megapack supply is nearly sold out.
Risks
6- Operating expenses rose 39% year over year and operating income fell 56%.
- Energy revenue fell 16% year over year even as deployments rose 10%.
- Deliveries fell 2% year over year, and other models dropped 48%.
- The capex target fell to about $20 billionDeferred spending could weigh on 2027 cash.
- In the company's own words, battery supply remains the main limit on vehicle output.
- Musk tempered Optimus expectationsDeliveries to outside customers will come by the end of 2027.
What to Watch
4- Musk expects Robotaxi revenue to become noticeable in the second quarter of 2027.
- Tesla asked to extend its deadline for answering NHTSA's Cybercab questions to November 20.
- Equipment commissioning at the Austin Fab is planned to start in 2027.
- Fourth-quarter earnings are expected in late January 2027.
Upcoming Earnings
To Understand This