Earnings
Tesla beats third-quarter profit forecasts as it trims 2026 capex plan to about $20 billion
Revenue was flat at $28.05 billion and operating income fell 56%, but slower spending kept free cash flow positive at $1.53 billion.
HedgeWeekly News Desk ·
Tesla reported third-quarter revenue of $28.05 billion after the US close on Wednesday, essentially unchanged from $28.10 billion a year earlier and slightly below the $28.13 billion Bloomberg consensus cited by Yahoo Finance. Adjusted earnings came to $0.48 a share, down from $0.50 but ahead of the $0.44 analysts expected. On a GAAP basis, diluted EPS fell to $0.22 from $0.39, and operating income dropped 56% to $718 million, cutting the operating margin to 2.6% from 5.8%.
The revenue mix shifted. Automotive sales slipped 3% to $20.56 billion and energy generation and storage revenue fell 16% to $2.88 billion, even though storage deployments rose to 13.7 GWh from 12.5 GWh. Services and other revenue climbed 33% to $4.61 billion. Regulatory credit income shrank to $113 million from $417 million. Total gross margin improved to 19.6% from 18.0%, but operating expenses rose 39% as research and development spending jumped 69%, according to Electrek's analysis of the shareholder update.
Capital expenditure more than doubled from a year earlier to $4.73 billion, yet came in well below the roughly $7.96 billion analysts had pencilled in for the quarter. That left free cash flow at $1.53 billion, against $3.99 billion a year ago and a consensus estimate of negative $4.92 billion. On the earnings call, management put 2026 capex at about $20 billion, below the more than $25 billion previously guided, and said it would be funded mainly from operating cash flow. Cash and short-term investments ended September at $45.4 billion. The shares, which closed up 3.4% at $386.47, fell about 2% in after-hours trading.
For investors, the lower spending plan is the key change: nine-month capex stood at $13.01 billion, so the new figure implies about $7 billion in the fourth quarter rather than the roughly $12 billion the old guidance required. The update said Cybercab has joined the Austin robotaxi fleet and Optimus production has begun on high-volume lines in Fremont, while Musk said on the call that reaching 20,000 Optimus units a week will take at least a year. The quarter also carried a $142 million unrealised loss on Tesla's SpaceX stake, a holding that gains weight now that both companies have formed special committees to consider a merger.