Why is Tesla stock falling after-hours today?

Tesla's stock experienced a decline in after-hours trading on Wednesday, plummeting 2.9% to $375.19 following the company's Q3 2026 earnings report. The stock's downward momentum was primarily driven by a notable improvement in earnings that obscured a significant decline in core business performance metrics. CEO Elon Musk's cautious remarks regarding the company's robotics and chipmaking initiatives, coupled with the lack of further details about a potential merger with SpaceX, also played a role in the stock's downward trajectory.

Despite meeting earnings estimates with adjusted earnings per share of $0.48 and revenue of $28.05 billion, Tesla's GAAP net income dropped by 43% year-over-year to $787 million, while operating income decreased by 56% to $718 million. The operating margin contracted to 2.6% from 5.8% a year earlier, as automotive revenue slipped 3% year-over-year to $20.56 billion due to lower vehicle prices and battery supply constraints.

Moreover, the energy storage segment fell short of estimates with only 13.7 GWh of deployments, compared to the anticipated 15.9 GWh. Capital expenditures surged by more than 100% year-over-year to $4.73 billion, reflecting increased investments in AI, robotics, and autonomous driving technologies. Although Tesla turned positive on free cash flow at $1.53 billion, the figure still lagged 62% behind the previous year's level.

Musk's comments highlighted ongoing challenges in Tesla's robotaxi operations, as well as the need for further development of the Optimus robot, and the substantial capital expenditure of over $100 billion for the Terafab chipmaking venture. The broader market support for the stock was limited, with Nasdaq 100 futures declining by 0.75%.