Tesla beat Wall Street estimates for third-quarter earnings and revenue, but net income fell 29% as spending on robotics and AI climbed. The report landed a day after Elon Musk said he favored a Tesla-SpaceX merger, pending shareholder support.
Tesla reported adjusted earnings of 48 cents a share against the 43 cents analysts polled by LSEG expected, and the stock rose slightly in extended trading.
Revenue holds flat while profit drops
Revenue came in at $28.05 billion, against $27.9 billion expected and $28.24 billion a year earlier. Automotive revenue declined 3% to $20.56 billion, and energy revenue fell 16% to $2.88 billion, while services and other revenue climbed 33% to $4.61 billion.
Net income attributable to common shareholders plummeted 29% to $787 million, or 22 cents a share. Business Insider reported that operating income fell 56% to $718 million, below the $746.3 million Wall Street estimate.
CNBC said the drop in profitability reflects a surge in spending on robotics and AI. Capital expenditures more than doubled to $3.73 billion. Free cash flow dropped 62% to $1.53 billion. Tesla itself pointed to higher operating expenses tied to its AI efforts and other R&D projects.
Tesla shares are down 14% this year, underperforming the rest of megacap tech.
FSD subscriptions grow
Active FSD (Supervised) subscriptions rose 67% from a year earlier to 1.74 million. Tesla also said its auto sales in Canada, Japan, Taiwan and Australia hit records during the quarter.
Third-quarter vehicle deliveries of 486,532 ran about 2% below the year-ago number.
Merger talk hangs over the report
On SpaceX's quarterly call, Musk said the boards at both companies had formed special committees to discuss a possible tie-up. On the Tesla side, a merger needs a 50% vote of all shares, which Musk called "quite a high hurdle".
Musk also said he was not included in those committees and that calling the merger a foregone conclusion would be overstating it, Business Insider reported.
Sources: CNBC, Business Insider
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