Q3 Earnings Out, Will TSLA Hit $500 ?

JC888
10-27

Q3 2025 Earnings.

$Tesla Motors(TSLA)$ released its Q3 2025 earnings on Wed, 22 Oct 2025, after market closed

Below are the details vs analysts’ estimates polled by LSEG::

  • Earnings per share (adjusted): $0.50 vs $0.54 estimated vs $Q3 2024’s $0.72; that’s a -30.56% YoY decline. (see below)

  • Revenue: $28.10 billion vs $26.37 billion estimated vs Q3 2024 $25.18 billion; that’s a +11.6% YoY gain. (see below)

  • Free cash flow: $3.99 billion vs Q3 2024’s $2.74 billion, that’s a +45.62% YoY gain.

  • Net income : $1.37 billion vs Q3 2024’s $2.17 billion; that’s a -36.87% YoY decline. This reflects deep margin erosion, as TSLA’s automotive gross margin fell to around 18%, down from nearly 20% a year earlier.

No denying that after 2 consecutive falling quarters in earnings, it is nice to see a good set of numbers coming out from TSLA.

Q4 2025 Guidance.

TSLA’s commentary on production and AI initiatives were upbeat and largely avoided key headwinds that included:

(1) Demand Normalization.

  • TSLA did not highlight expected Q4 delivery slowdown following the pre-expiry surge.

  • Analysts projected weaker sales momentum into year-end due to (a) tax credit exhaustion & (b) increased competition from peers like BYD, GM & Ford.​

Decline In The Making.

  • Objectively speaking, TSLA EVs across its 3 main markets (US, EU & China) has been trending down for a while now. (see above)

  • Started with EU from Q3 2023, followed by US from Q4 2023 and then China from Q3 2024.

  • US’s Q3 2025 sales pick up is a one-off abnormally.

  • For what it’s worth, it no longer compares to $Apple(AAPL)$ ’s iPhone in the EV market, it used to be until it wasn’t.

(2) Margin Outlook.

Tesla avoided direct discussion of margin recovery, even as cost-saving gains from scaling have flattened and price cuts continue to bite.​

(3) Inventory and Incentive Overhang.

Q3’s record deliveries (497,000 units) came partly from inventory drawdowns, masking supply-demand equilibrium issues. Inventory may now rebuild in Q4.​

(4) Autonomy and FSD Focus.

Musk doubled down on narrative around Full Self-Driving and Robotaxi potential rather than near-term EV profitability.

During Wednesday’s earnings-call, Mr CEO said he thinks the robotaxi service would be operating in 8 to 10 metropolitan areas by end 2025 (that is only 2½ months left).

That’s a long step back from last earnings call in July 2025, when Mr CEO said the service would be available to half the US population by end 2025.

Just for the record - that would still be more than US robotaxi leader Waymo, that currently operates in 5 metro areas: Phoenix, San Francisco, Los Angeles, Austin and Atlanta.

It took Waymo more than 8 years to get to this point, after launching its first test service in Phoenix in 2017.

What are the odds that TSLA can achieve 8 - 10 US cities by year end ? Nothing surprising from a pathological story-teller, always making things sound great but never finishing them on time, ever!

(4) Cybertruck - Failure to launch.

There was hardly any mention about Cybertruck as Q3 2025 data indicates roughly 35,000 Cybertruck delivered YTD, with sales slowing sharply to around 5,000 units per quarter based on earlier 2025 numbers.

Multiple outlets report that consumer interest has flatlined.

Compared to TSLA’s 2025 guidance of 80,000–100,000 cybertrucks for the full year (announced during earnings discussions earlier in 2025), it is safe to assume that the Cybertruck is a product that failed to launch !

CEO Musk’s cybertruck-silence during earnings call - no (new) commitments on Cybertruck’s (a) production volumes, (b) upgrades, or (c) refresh timeline — can be interpreted as management pivoting its public narrative toward AI, robotics, & energy storage, instead.

Stock Price Movement.

On Wed, 22 Oct 2025, TSLA shares dipped slightly in after-hours trading.

  • This was mainly due to its ‘weak’ set of earnings results.

On Thu, 23 Oct 2025, when trading resumed - TSLA rose instead, closing at $448.98 by endday.

This time, it was due to its:

  • Strong free cash flow position.

  • Investors’ confidence that Tesla remains profitable and well-capitalized with about $41.6 billion in cash and investments, supporting its long-term growth initiatives.

  • Analysts’ bullish stance on TSLA next-generation Full Self-Driving (FSD) technology and potential robotaxi deployment slated for 2026 and beyond, offering a compelling future growth narrative beyond just vehicle sales.

By the time Fri, 24 Oct 2025 came around, pessimism returned and TSLA dipped by -3.40% ending the week at $433.72:

  • More importantly, the dip underscores a complex interplay of (a) investor expectations, (b) broader market sentiment, and (c) persistent valuation concerns surrounding the innovative but often volatile automaker.

TSLA $500 Per Share?

Based on Friday closing price of $433.72, the target price is +15.28% away.

Despite its earnings’ poor showing, TSLA current stock price does not make sense.

Perhaps financial institution Truist, Senior Equity Research Analyst, William Stein best summed it up as:

  • TSLA’s auto delivery data and earnings are “decreasingly” relevant to its stock price.

  • Most of the value of TSLA shares is tied up in AI projects including (full self-driving), robotaxi, and especially Optimus.

  • All of the AI projects are at once quite unproven and close to zero revenue, and potentially extremely valuable.

My viewpoints: (mine only)

I have reservations about Stein’s outlook.

This is because:

  • Waymo is currently the undisputed leader for robotaxi while TSLA’s robotaxi is still under trial.

  • Most major tech & semiconductor companies are collaborating with OpenAI and not xAI.

  • While TSLA”s Optimus seems to be next product that TSLA is betting on, China has already beaten TSLA’s to it. (see below)

  • Like the cybertruck, TSLA’s Optimus humanoid is a niche product. This means Optimus’s appeal and demand will be limited and not universal unlike its EV.

  • Besides that, investors need to face the truth — would you really want an Optimus robot in your home if you had a choice?

  • Never mind the (a) costs, (b) maintenance & updates and (c) safety.

I think Optimus will appear in factories long before it winds up in homes, provided the robot can meet the automation industry’s standard of a 2-year return on investment (ROI).

Will Optimus fare better than Cybertruck OR will it fade into the background QoQ, over time ?

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  • Do you think TSLA next product - Optimus humanoid will be a money spinner ?

  • Do you think TSLA will halt Cybertruck production if demand remains poor?

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