Is Tesla Stock Safer Or Riskier Than A Year Ago?
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Investors who own Tesla (TSLA) stock bought a growth story and paid for it. At the October 26 close, the shares traded at 394.3 times Tesla’s profit over the last twelve months, compared with 22.9 times for the S&P 500. The automaker lined up $30 billion of new borrowing capacity in September to support the expected growth in its capital spending, and then reported its September quarter on October 21. Tesla and SpaceX have also each formed a special board committee to review a possible merger, which this piece does not weigh. So does owning Tesla carry more risk now than it did a year ago?
Partly Riskier: Tesla Earns Less Than Its Stock Pay
Tesla booked $4.3 billion of stock-based pay expense over the twelve months to September 30, 2026, more than its net income of $3.22 billion. This marks the first time in five years that stock pay exceeded profit over a trailing twelve-month period. Profit had previously been the larger figure at each of the 20 quarter ends from September 2021 to June 2026. A year ago, profit led by a wide margin, with net income of $5.08 billion compared with $2.45 billion in stock pay.
The cash side remains largely unchanged. Tesla ended September with net cash of $28.8 billion, compared with about $27.8 billion a year earlier. Net cash consists of cash and short-term investments less total debt. Management said on the October 21 call that Tesla does not plan to draw on any of the new credit lines in 2026. For now, the added risk sits in the profit rather than the balance sheet, though management expects capital spending to keep growing over the next few years.
Why Did Tesla’s Profit Fall Below Its Stock Pay?
This happened because the two figures moved in opposite directions. Stock pay rose to $1.17 billion in the September quarter from $0.663 billion a year earlier, while net income fell to $0.787 billion from $1.37 billion.
Sales held steady. Quarterly revenue came in at $28.0 billion, level with a year earlier, and gross margin rose to 19.6% from 18.0%. Management said Tesla delivered more than 480,000 vehicles in each of the last two quarters, marking a first for the company. The profit erosion occurred further down the income statement, where operating income dropped to $0.718 billion from $1.86 billion a year earlier.
Management said on the call that Tesla is in a huge investment cycle. Operating expenses keep rising from one quarter to the next, and the company expects them to go on growing until it commercializes its new products. So Tesla’s sales did not shrink; its operating costs grew.
What Tesla’s Thinner Profit Means For Your Shares
The profit behind each of your shares is smaller than a year ago. Tesla’s net income over the twelve months to September was $3.22 billion, down from $5.08 billion a year earlier. So far, the share count has barely grown. Tesla reported 3,541 million diluted shares in the September quarter, compared with 3,526 million a year earlier.
Management also plans to keep spending heavily. The company projected capital spending at about $20 billion for 2026, and said it plans to fund it mainly from cash from operations. Over the next few years, this spending will go toward a Robotaxi fleet, production capacity for Optimus, and a semiconductor fab, among other projects, management said.
For five years, a Tesla shareholder could count on the company earning more over twelve months than it paid its staff in shares. That is no longer true, though Tesla still holds far more cash than debt. The company is expected to report its December quarter in January 2027, and twelve-month net income set against stock pay is the measure to watch in that report.
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