TLDR
- Barclays upgraded Tesla (TSLA) to Buy from Hold and raised its price target to $450 from $370.
- Tesla stock was up about 2% in premarket trading at $379.69 on Monday, and was down 17% year to date.
- Analyst Dan Levy expects a Tesla and SpaceX merger to bring a premium for Tesla holders.
- Q3 revenue was about $28.0 billion, with non-GAAP EPS of $0.48 versus the $0.45 consensus.
- Tesla cut its 2026 capital spending target to $20 billion from $25 billion.
Tesla (TSLA) stock was trading around $379.69 in premarket action on Monday, up about 2%. The move came after Barclays upgraded the stock to Buy from Hold. S&P 500 and Dow futures were up 0.1% and 0.3%.
Analyst Dan Levy raised his price target to $450 from $370. That target points to roughly 20% upside from Monday’s premarket level. Even so, the stock came into the week down 17% year to date and 14% over the past 12 months.
Levy pointed first to a possible merger with SpaceX. He wrote that a combination is “heavily expected” and that some premium to Tesla stock is likely.
The Merger Angle
Elon Musk recently confirmed that the boards of both companies are looking at a deal. Cantor Fitzgerald noted that special committees have been formed to explore it.
A combined company would span AI models and AI-based hardware, including humanoid robots. Investors have been waiting for Tesla’s robotaxi and robot efforts to add to earnings. Under a SpaceX umbrella, that could happen sooner.
Levy also liked what he sees in the car business. He said core trends are moving up after flat growth in 2024 and 2025. He expects auto sales to grow this year after two years of declines.
He sees more room in 2027. He pointed to demand tied to Full Self-Driving and rising exports from Giga Shanghai.
Tesla said it had 1.74 million FSD users at the end of the third quarter. That is up from 1.04 million a year earlier. About 75% of new Tesla buyers pay $99 a month for the product.
Sales are up about 13% this year compared with 2025. Profit is not keeping pace, as operating income has fallen about 30% year over year. That gap helps explain the weak stock performance this year.
Q3 Results Still in Focus
Third-quarter revenue came in at about $28.0 billion, in line with Cantor Fitzgerald’s $27.9 billion estimate. GAAP gross margin was 19.6%, above Cantor’s 17.1% forecast. Automotive gross margin, excluding regulatory credits, was 18.1%.
Non-GAAP earnings per share were $0.48, above the $0.45 consensus. Free cash flow was about $1.53 billion. Analysts had expected negative $4.4 billion.
The cash flow beat came from lower spending. Third-quarter capital expenditures were about $4.7 billion, well under the $8 billion consensus. Tesla also lowered its 2026 capital spending target to $20 billion from $25 billion.
Cantor Fitzgerald kept its Overweight rating and $485 price target. StoneX has a Buy rating with a $475 target. Following the Barclays move, 49% of analysts covering Tesla rate it a Buy, according to FactSet.
That is below the 55% to 60% typical for S&P 500 stocks. The average price target sits near $415. Tesla’s market value is about $1.47 trillion.
The latest news on the car side comes from Europe. Tesla’s FSD system was approved in Latvia, the tenth EU member state to allow it.
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