Tesla Stock Slips Despite Earnings Beat and Cash Flow
Tesla reported adjusted earnings per share of $0.48, above the $0.44 estimate, while free cash flow reached $1.53 billion. Shares nevertheless fell in extended…
Tesla stock slips despite a third-quarter earnings beat, as investors weigh signs of pressure in its car business against stronger-than-expected cash flow. The company reported adjusted earnings per share of $0.48, topping the $0.44 estimate, while automotive revenue fell 3% from a year earlier.
Tesla shares slid more than 3% in extended trading after the results, CNBC reported. The company’s revenue was $28.05 billion; its free cash flow reached $1.53 billion, far above the estimate of negative $4.92 billion cited by Yahoo Finance.
The results offered a mixed picture. Tesla beat earnings expectations and reported deliveries above the Bloomberg consensus, but revenue from its core automotive business declined and net income fell year over year, according to CNBC.
Yahoo Finance reported that Tesla’s capital expenditures were $4.732 billion, below the estimate of $7.96 billion. On its earnings call, the company lowered its full-year capital expenditure guidance to $20 billion from $25 billion previously.
Tesla stock slips despite stronger cash flow
Morningstar analyst Seth Goldstein said the market was reacting to “capacity constraints in the company's auto and battery growth, which could slow near-term growth.” The assessment points to a concern behind the market reaction: a strong quarter on some financial measures did not resolve questions about how quickly Tesla can expand its vehicle and battery businesses.
Tesla reported third-quarter revenue of $28.05 billion, compared with Bloomberg’s consensus of $28.13 billion, Yahoo Finance said. Adjusted earnings per share came in at $0.48 versus the $0.44 estimate. Adjusted EBITDA was $3.90 billion, compared with $3.66 billion expected.
CNBC reported automotive revenue fell 3% from a year earlier to $20.56 billion. The company attributed weaker automotive revenue and profits to lower average selling prices and difficulty securing enough battery supplies to meet an order backlog.
Net income attributable to common shareholders dropped 29% to $787 million, or 22 cents a share, from $1.11 billion, or 32 cents a share, a year earlier, CNBC reported. The company’s services and other revenue rose 33% to $4.61 billion, while energy revenue fell 16% to $2.88 billion.
For investors, the contrast is immediate: cash flow beat estimates, but the revenue mix and lower profit show that the earnings headline does not capture every pressure on the business. The reduced spending guidance also raises a question about the pace of investment in Tesla’s stated ambitions in AI and robotics, an issue Yahoo Finance attributed to Roundhill CEO Dave Mazza.
Spending plans and robotics ambitions
Tesla CFO Vaibhav Taneja said savings would come from “managing our capital deployment efficiently, and plan to fund [capex] primarily from our cash flows from operations,” according to Yahoo Finance.
CEO Elon Musk said on the earnings call that spending would become more meaningful next year and “noticeable in the tens of billions in '28.” He also said the Optimus robot had started production at Tesla’s Fremont factory.
The company said in its earnings release: “While we will continue to iterate on the hardware and manufacturing process, we have proven that the current manufacturing process for Optimus is suitable for a commercial product.” Musk said reaching an annualized rate of 1 million units and 20,000 units a week could take “probably at least a year — maybe a little longer.”
Tesla said it plans to reach 400 MW of AI training compute by the end of the year. Active subscriptions to its full self-driving service rose to 1.74 million, according to Yahoo Finance. Musk said, “The biggest driver of demand is full self-driving.”
The company also reported that its Cybercab fleet in Austin had grown by a factor of 10. Yahoo Finance said Tesla began commercial Cybercab service in Austin on Sept. 3, while the National Highway Traffic Safety Administration issued the company a special order with 21 requests about how it self-certified the vehicle, which has no steering.
Musk said the driverless robotaxi fleet would begin contributing to Tesla’s financial results in 2027, CNBC reported. He said the impact would not move the needle in the current quarter and could become noticeable in Q2 and then “probably a big deal by Q3 or Q4 of next year.”
On the possibility of a tie-up with SpaceX, Musk said both companies had formed special committees to discuss the idea, according to Yahoo Finance. He also cautioned that a merger should not be treated as certain.
“Do I think it would be a good idea? Yes,” Musk said on SpaceX’s earnings call. On Tesla’s call, he added: “With regard to a potential merger with SpaceX, I think I said everything that should be said yesterday [Tuesday].”
Source: finance.yahoo.com
