Tesla Q3 earnings report is coming this week! Expected revenue is $26.2 billion, focus on these three key areas!
$Tesla(TSLA.US) is scheduled to release its Q3 2025 earnings report on October 22. Despite delivering a record 497,000 vehicles and achieving a new high in energy storage deployment of 12.5GWh, market concerns remain—plunging European sales, expiring tax credits, shrinking cash flow, and management compensation disputes plus FSD safety investigations have cast uncertainty over the results.
🔥Market Focus
1. Profit Quality: Gross Margin Recovery & Product Mix Balance
Whether automotive gross margins can recover is investors' top concern. Under its "price-for-volume" strategy, Tesla faces severe profit pressure. Zacks estimates Tesla's Q3 auto gross margin at 16%, continuing the margin pressure seen in its 2025 interim report.
Deeper worries lie in the continued decline in ASP (average selling price). The newly launched budget Model 3/Y, while pulling starting prices below $37K, has sparked brand premium concerns due to feature cuts, causing a 4.45% stock drop on announcement day.
2. Energy Business: Profit Validation of the Second Growth Curve
The energy segment is expected to report $2.93B in revenue, potentially a bright spot. It achieved a 30.3% gross margin in Q2, showing strong profit potential. But markets now demand proof of sustained profitability beyond scale growth—can it truly offset auto business risks?
3. Governance & Regulatory Risks: Uncertainty Premium Widens
Governance risks center on the aftermath of the $56B compensation case. Restoring the original plan may dilute shares; keeping it invalid brings ongoing uncertainty. This dilemma forces investors to demand higher risk premiums.
Regulatory pressure is equally critical—FSD investigations involve safety issues across many vehicles. A recall would require warranty provisions, directly impacting financials.
Over the past 4 earnings reports, Tesla's stock moved ±7.2% on average post-release, with 3 times. Historically, post-earnings trends depend more on Musk's forward signals during calls than current data.
🔥Wall Street Views
Major institutions are sharply divided—bulls focus on AI and autonomous driving's long-term potential, while bears worry about near-term profit pressure and demand sustainability.
Bulls lean on long-term tech narratives. Melius Research highlights Tesla's AI/computing edge, calling it "AI's first major physical-world embodiment," with a Buy rating and $520 target. Morgan Stanley also backs its autonomy shift.
Bears stress short-term financials. Wells Fargo's Colin Langan notes Q3 deliveries benefited from US EV tax credit expiry-driven promotions, calling it unsustainable, and keeps an Underweight rating.
Tesla stands at a crossroads—record deliveries vs. strained margins. Management's margin outlook, energy profitability, and demand forecasts will dictate its stock's next move.
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