Tesla's profit drops as it explores a possible merger with Musk's other public company, SpaceX
Tesla reported a decline in third-quarter profit, but generated more cash than analysts expected, leaving investors with a mixed picture as it explores a possible merger with Elon Musk's other big company, SpaceX.
Tesla's third-quarter profits dwindled as the electric vehicle manufacturer increased investments in artificial intelligence, robotics, and autonomous transport. The company reported a net income of $787 million (€701 million), or 22 cents per share, a 43% decline from the previous year. Revenue remained flat at $28 billion (€24.9 billion), slightly below the estimated $28.3 billion. However, excluding certain items, earnings per share of 48 cents exceeded analysts' expectations by 3 cents.
Tesla generated $1.5 billion (€1.3 billion) in free cash flow, which is a significant improvement from the previous year, despite its heavy spending on AI. Morningstar analyst Seth Goldstein noted that the positive cash flow was unexpected and indicated Tesla's more capital-efficient approach. The company reduced its capital spending forecast for the year 2026 to around $20 billion (€17.8 billion), down from the previously expected $25 billion (€22.3 billion).
Tesla's focus extends beyond cars, with substantial investments in Elon Musk's other company, SpaceX. The companies are in talks to potentially merge, with both companies exploring a special committee of independent directors to discuss the possibility. Musk mentioned that the companies could benefit from collaboration in AI software, chip design, robotics, and satellite infrastructure.
However, no terms have been agreed upon, and there is no guarantee of a deal. The merger speculation added further uncertainty to Tesla's future.
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