Tesla (TSLA) Stock: What Investors Should Know After the Q3 Earnings Beat

TLDR

• Tesla (TSLA) closed Wednesday at $386.47, up 3%, before its Q3 report.
• Adjusted EPS was 48 cents vs. 43 cents expected, while automotive revenue fell 3% to $20.56 billion.
• Net income dropped 29% to $787 million as AI and Optimus spending surged.
• Active FSD subscriptions rose 67% to 1.74 million.
• Musk said Robotaxi should start contributing to financials in 2027.

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Tesla (TSLA) stock closed Wednesday at $386.47, up $12.76 or 3%. That was before the earnings report came out after the bell.

Tesla, Inc., TSLA

After hours, the move was mixed. CNBC reported a slide of more than 3% in extended trading, while Barron’s had the stock up 1.5% at $392.43.

Tesla posted adjusted earnings of 48 cents a share, ahead of the 43 cents analysts expected, per LSEG. Revenue came in at $28.05 billion against $27.9 billion expected.

TESLA $TSLA Q3’26 EARNINGS HIGHLIGHTS

🔹 Revenue: $28.05B (Est. $27.88B) 🟢; flat YoY
🔹 Adj. EPS: $0.48 (Est. $0.43) 🟢; -4% YoY
🔹 Adj. EBITDA: $3.90B (Est. $3.71B) 🟢; -8% YoY
🔹 GAAP Gross Margin: 19.6%; +160 bps YoY

Segment Revenue:
🔹 Automotive: $20.56B; -3% YoY
🔹… pic.twitter.com/UcHBuFgRJv

— Wall St Engine (@wallstengine) October 21, 2026

Barron’s described sales as just shy of Wall Street estimates, so the revenue beat depends on whose numbers you use. Revenue was down slightly from $28.24 billion a year ago.

Costs Weigh on Profit

Operating profit was $718 million, well short of the $1.4 billion analysts projected. Net income fell 29% to $787 million, or 22 cents a share.

Tesla pointed to a jump in spending on Optimus humanoid robots and other AI work. Capital expenditures more than doubled to $3.73 billion.

Free cash flow dropped 62% to $1.53 billion. Still, it stayed positive after turning negative in the second quarter.

Automotive revenue fell 3% to $20.56 billion. Tesla blamed lower average selling prices and trouble getting battery supplies.

Energy revenue slid 16% to $2.88 billion. Services and other revenue rose 33% to $4.61 billion.

Automotive gross margin, excluding regulatory credits, was about 18%. That is up from 16% in the second quarter and about a point better than expected.

Musk Talks Merger, Robotaxis and FSD

A day earlier, Musk told investors on SpaceX’s call that a merger of the two companies would be a “good idea.” Boards at both firms have formed special committees to discuss it.

On the Tesla call, Musk said he had “said everything that should be said yesterday.” He had earlier joked he felt like he was “tap dancing through a minefield.”

Active FSD subscriptions rose 67% from a year ago to 1.74 million, up from 1.48 million last quarter. Tesla said the system is driving demand where it is available.

Musk said the Robotaxi fleet should start to add to financials in 2027. Texas has authorized 362 Model Y Robotaxis and 449 Cybercab vehicles for driverless operation.

Third-quarter deliveries were 486,532, about 2% below a year earlier. The stock is down 14% this year.

Tesla plans to give some customer cars access to FSD (Unsupervised) around the second quarter of next year. Musk expects Optimus design, reliability and AI issues to be solved around the end of next year.