Tesla Beats Revenue Estimates and Explores SpaceX Merger

Tesla, Inc. reported third-quarter revenue of $28.05 billion, surpassing Wall Street estimates of $27.88 billion. The results were bolstered by a 33% surge in services revenue to $4.61 billion and increased demand in Europe driven by high gasoline prices. Adjusted earnings per share reached 48 cents, beating the 44-cent consensus, though net income fell 44% to $787 million. Operating income dropped 56% to $718 million as the company increased spending on Optimus, the Cybercab, and Super Intelligence.

The company reported a surprise positive free cash flow of $1.53 billion, significantly beating expectations of a nearly $5 billion cash burn. This result stemmed from lower-than-expected capital expenditure of $4.7 billion, which was $3 billion less than internal estimates. Despite these financial shifts, Tesla expanded its operations by starting high-volume Optimus production in Fremont and beginning production at Megafactory Texas. The company also launched unsupervised Cybercab robotaxi rides in Austin, as well as in Florida and Texas.

Simultaneously, CEO Elon Musk announced that Tesla and Space Exploration Technologies Corp. have established special committees to discuss a potential merger. Musk described the combination as a good idea but cautioned that the process faces significant hurdles, particularly in securing shareholder support. Market reaction to the earnings and merger news was mixed, with Tesla stock rising 3.6% during regular trading before fluctuating in after-hours reports.