Tesla stock falls despite higher third-quarter profits and better-than-expected capital spending
Tesla (TSLA) reported better-than-expected third-quarter earnings, with free cash flow and capital spending beating Wall Street estimates.
Tesla reported third-quarter revenue of $28.05 billion, compared to a Bloomberg consensus of $28.13 billion. Tesla reported adjusted EPS of $0.48 versus estimates of $0.44, with adjusted EBITDA of $3.90 billion versus $3.66 billion.
Tesla stock pared some of its earlier losses, with Morningstar analyst Seth Goldstein saying the market was reacting to “capacity constraints in the company’s automotive and battery growth, which could slow growth in the near term.”
381.92 -4.55 (-1.18%)
At 11:10:44 a.m. EDT. Open market.
But that may not be the whole story. Tesla reported free cash flow of $1.53 billion versus an estimate of -$4.92 billion, with capital expenditures climbing to $4.732 billion versus an estimate of $7.96 billion for the quarter.
During the earnings call, Tesla updated its full-year capex guidance to $20 billion, up from $25 billion. Tesla Chief Financial Officer Vaibhav Taneja said the savings would come from “effectively managing our capital deployment and financing plan (investments) primarily from our operating cash flow,” he said.
“I think the investments end up being a little bit lower than we anticipated, but we’ll start to get more significant next year. And that will be in the tens of billions in ’28,” CEO Elon Musk said on the call.
Roundhill CEO Dave Mazza says the reduction in investment means Tesla isn’t moving quickly enough toward an AI-focused company betting on robotaxis, Optimus robots and computing.
Tesla revealed that its Optimus robot has started production at its Fremont factory. “Even as we continue to improve the hardware and manufacturing process, we have proven that Optimus’ current manufacturing process is suitable for a commercial product,” the company said in its earnings release.
“I would expect it would probably take us at least a year — maybe a little longer — to get to that annualized rate (1 million units), to get to 20,000 units a week,” Musk said during the earnings conference call. Musk added that Tesla could release a demo video of Optimus in about a month, emphasizing that he doesn’t want the robot’s movements to be planned in advance.
Regarding its other AI efforts, Tesla said it plans to reach 400 MW of AI training computing by the end of the year. Tesla said its active FSD (full self-driving) subscriptions had climbed to 1.74 million.
“The main driver of demand is fully autonomous driving,” Musk said of vehicle sales.
“The Cybercab fleet in Austin has grown 10x,” Musk added of Tesla’s robotaxi fleet. He added: “I don’t think there’s a company in the world that can match our scale when it comes to autonomous vehicles.”
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