I've Covered Tesla for Over a Decade. Here's Whether It's a Stock to Buy More Than 21% Below Its Record.

Tesla reported its third-quarter results on October 21, with the stock price currently near $380, more than 21% below its record close of $489.88 in December 2025. On the surface, the quarter appeared positive, with operating income increasing to $718 million from $398 million in the second quarter, and Megapack batteries nearly sold out for 2027.

However, a closer look reveals that a significant portion of the profit came from tariff refunds, which don't necessarily indicate the health of Tesla's core business. Revenue for the quarter remained flat year-over-year at $28.0 billion, marking a significant slowdown in growth. Operating income fell by 56% year-over-year, and net income under generally accepted accounting principles (GAAP) dropped 43% to $787 million.

The most critical aspect is in Tesla's quarterly filing, where $786 million in tariff refunds were recognized as lower costs, and $339 million owed to energy storage customers were deducted from revenue. Without these refunds, operating income would have been around $270 million, which is still below the second quarter's $398 million.

CEO Elon Musk highlighted the company's near exhaustion of Megapack batteries for 2027 and the anticipation of Robotaxi, Tesla's driverless ride-hailing service, becoming profitable by mid-2027. However, the valuation remains concerning, with the stock trading at approximately 420 times earnings, despite a price dip of more than 21% from its record.