Tesla Beats Earnings but Stock Slides as Musk Cuts 2026 Spending to $20 Billion

Tesla beat earnings expectations for the third quarter — and its stock still fell more than 3% on Thursday, sliding about 5% in premarket trading at one point. Investors ignored the beat and focused on two warnings hidden inside the report: profit fell 44% from a year earlier, and Tesla slashed its 2026 capital-spending plan from over $25 billion to about $20 billion.

Key Facts

  • Adjusted EPS: 48 cents — ahead of expectations
  • Revenue: about $28 billion — roughly flat vs a year ago, slightly below targets
  • Net income: down 44% year over year
  • Operating income: $718 million vs $1.47 billion expected — about half of forecasts
  • Deliveries: 486,532 vehicles in the quarter
  • Free cash flow: $1.53 billion generated, vs expectations of heavy cash burn
  • 2026 capex plan cut: $25 billion → about $20 billion

Why did Tesla stock fall on an earnings beat?

Because the growth story stumbled. Operating income came in at barely half of what analysts expected, squeezed by higher AI and R&D spending, lower regulatory-credit revenue and a weaker energy-storage business. Automotive gross margin excluding credits improved to 18.1%, but flat revenue and a 44% profit drop told investors the EV price war is still biting.

Why does the spending cut matter so much?

Tesla's valuation rests on the future — robotaxis, humanoid robots and AI. Cutting the 2026 investment budget by $5 billion raised an uncomfortable question on a day when the whole market was already doubting AI spending: if even Elon Musk is tightening the belt, how fast can those future businesses really arrive? Discussions of a possible Tesla–SpaceX combination remain preliminary, with committees formed but no deal agreed.

What happens next for Tesla?

Watch delivery growth into the holiday quarter and any update on the robotaxi rollout. Bulls point to the $1.53 billion of free cash flow and the margin recovery; bears point to falling profit and a shrinking investment plan. Thursday's reaction shows which side is winning — for now.

FAQ

Did Tesla beat or miss earnings?
Both. Adjusted EPS of 48 cents beat expectations, but revenue slightly missed and operating income missed by a wide margin.

How many cars did Tesla deliver?
486,532 vehicles in the third quarter.

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