TLDR
- Tesla (TSLA) stock fell 3% on Thursday after its Q3 report and opened Friday at $374.58.
- Adjusted EPS was 48 cents versus 45 cents expected, but revenue was flat at $28.05 billion.
- Automotive gross margin was about 18%, but $786 million in tariff refunds helped. Without them it was about 17%, in line with estimates.
- Tesla cut its 2026 capital spending plan to $20 billion from more than $25 billion.
- Analysts hold a consensus āHoldā rating with an average price target of $408.61.
Tesla (TSLA) stock dropped 3% on Thursday after its third-quarter report. The stock opened Friday at $374.58 and was up 0.1% in premarket trading at $374.80.
The drop was mild compared with the 14.5% plunge after the second-quarter report. It also came on a rough day for the market, with Meta Platforms falling 7% on AI financing worries.
Tesla reported adjusted earnings per share of 48 cents, a few pennies above the 45 cents Wall Street expected. Revenue came in at $28.05 billion, down 0.2% from a year ago and just under the $28.06 billion forecast.
Automotive gross margin, excluding regulatory credits, was about 18%. That was roughly one percentage point better than analysts projected.
The Tariff Refund Behind the Margin Beat
Teslaās 10-Q filing explains the beat. A U.S. Supreme Court ruling in February 2026 invalidated certain tariffs, and Tesla booked $786 million in refunds in the quarter.
Of that, $526 million reduced energy cost of revenues and $260 million reduced automotive cost of revenues. Adjusted for the refunds, automotive margin was about 17%, in line with estimates.
GLJ analyst Gordon Johnson said the āgross margin beat mysteryā was solved. He had noted that Tesla missed margin consensus six times since 2023, and the stock fell the next day each time, by an average of 11.3%.
Johnson also wrote that without the refunds, Tesla would have missed across the board. Operating income fell 56% and energy revenue missed expectations.
Some numbers did please investors. Free cash flow was about $1.5 billion, and more than 75% of North American deliveries included paid Full Self-Driving subscriptions.
Tesla plans to expand its Cybercab robotaxi service beyond Austin. It has also started building Optimus humanoid robots in Fremont.
Analysts and the SpaceX Question
Analysts moved in different directions after the report. Morgan Stanley raised its target to $410, and JPMorgan went to $430. Mizuho lifted its target to $460, and RBC moved to $480 from a lower level.
Royal Bank of Canada also cut its rating to āsector performā from āoutperform.ā MarketBeat data shows one Strong Buy, 24 Buy, 20 Hold and three Sell ratings.
The company also cut its 2026 capital spending plan to $20 billion. Investors questioned whether that points to slower progress on AI infrastructure.
A possible Tesla and SpaceX merger remains in focus. Both companies formed independent committees to study a deal, and Elon Musk endorsed the idea on Wednesday.
Musk is excluded from the talks because of conflicts. A deal needs approval from both boards and Tesla shareholders, and Musk says it is not certain.
Tesla stock is down 17% this year. It trades above its 50-day average of $363.41 and just below its 200-day average of $377.25, with a 12-month range of $297.38 to $498.83.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
