Tesla Shares Drop 4% Pre-Market Despite Beating Earnings Estimates

Tesla shares fell about 4% in premarket trading on Thursday, largely because of concerns about substantial investment in emerging technology businesses. Tesla reported adjusted earnings of 48 cents per share for the quarter ended September 30, exceeding the 43 cents expected by analysts surveyed by LSEG. Third-quarter revenue totaled $28.05 billion, compared with the $27.9 billion consensus estimate. Tesla shares have lost about 14% this year.

Tesla has committed substantial resources to the Optimus humanoid robot and a robotaxi fleet, neither of which has become a major revenue source. Revenue from Tesla's core automotive business declined 3% from a year earlier in the third quarter. Energy revenue fell 16% year over year to $2.88 billion. Several analysts said stronger long-term growth in emerging technologies could compensate for declining revenue. However, the near-term outlook could be more volatile.

William Blair analyst Jed Dorsheimer, who rates Tesla market perform, said Thursday that Elon Musk lowered expectations for the Optimus production ramp and meaningful robotaxi revenue contributions for a year, weighing on shares after hours. Dorsheimer remained strongly positive on Tesla Energy but said the development pace and economics of robotaxis and Optimus would continue determining Tesla's valuation. Dorsheimer said a potential merger between SpaceX and Tesla could add value to Tesla shares.

Goldman Sachs maintained a neutral assessment with a $360 price target, implying 7% downside. Goldman Sachs expects higher operating expenses and capital expenditure to pressure profitability and free cash flow over the near to medium term. Goldman Sachs expects these businesses to support attractive long-term compound annual earnings growth, but sees competition limiting the improvement's size and speed and considers the valuation full.

HSBC rated Tesla reduce with a $157 target, implying a 60% decline from Wednesday's closing price. HSBC said management suggested growth would accelerate despite weak reported growth rates.

Truist maintained a hold rating and an unchanged $370 target. Truist said Tesla's shift from automobiles toward artificial intelligence continued in the third quarter, with lower planned annual capital expenditure accompanied by increased operating expenses. Truist said spending on FSD, Robotaxi, cybercab, Optimus, Cortex and Terafab materially reduced operating margins and would support the AI transition while pressuring margins and cash flow for some time. Truist said management sounded more optimistic than management had in a long time.

JPMorgan rated Tesla neutral and said Tesla reduced 2026 capital expenditure guidance to about $20 billion from about $25 billion or more, citing capital efficiency. JPMorgan said commentary suggested spending would increase further in 2027 and 2028 to fund robotaxi, Optimus, AI computing and Terafab milestones. JPMorgan expects investors to have mixed reactions because deferred spending reduces near-term cash consumption but also suggests delays in investments supporting long-term opportunities. JPMorgan perceived no change in the Optimus production timeline and said the robotaxi expansion had matched investor expectations since the Cybercab launch.

Barclays rated Tesla equal weight and identified the route to renewed growth as a central question. Barclays said investors questioned the reduction in 2026 capital expenditure guidance to $20 billion from more than $25 billion. Barclays said Tesla attributed the reduction to efficiency, while some bearish investors would interpret the cut as a production-ramp delay, a view Barclays was less inclined to share.

Morgan Stanley maintained an equal-weight assessment and increased the price target from $400 to $410, implying 6% upside. Morgan Stanley identified sustained increases in unsupervised driving miles, fleet density and safety performance as the key measures of progress toward commercial scale. Morgan Stanley said the pace of progress increased confidence in the bank's fleet-size estimates through 2027.

Canaccord Genuity reiterated a buy rating and increased the price target from $410 to $442, implying a 14% gain from Wednesday's close. Canaccord Genuity raised modeled vehicle deliveries and energy-storage margins, citing company commentary, and increased estimated 2028 non-GAAP earnings per share from $10.73 to $11.06. Canaccord Genuity applied a valuation multiple of about 40 times those earnings, up from about 38 times, while noting other Magnificent Seven stocks traded at about 20 times estimated 2028 earnings. Canaccord Genuity considered the premium of more than twice the comparison multiple reasonable because of long-term opportunities in electric vehicles, robotics, autonomous driving, energy storage and what the bank called "amazing abundance."

Deutsche Bank reiterated a buy rating and said data-center expansion and electricity-grid constraints supported strong Megapack demand, with record orders and backlog. Deutsche Bank said Tesla had almost sold all available Megapack capacity for 2027. Deutsche Bank said Musk expected energy gross margins to rise meaningfully and the chief financial officer expected higher average selling prices driven by data-center demand to improve margins further. Deutsche Bank considered that outlook more positive than second-quarter guidance suggesting margins would return to the low-to-mid-20% range.