Tesla Inc. (NASDAQ: TSLA) reported its quarterly earnings after the market closed on October 22. SLA stock dropped approximately 5% in after-hours trading as headline earnings missed analyst expectations. However, in midday trading the day following the report, the stock has pushed back and is approaching the previous session’s closing price.
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Stock price movement after an earnings report can be deceptive. This pattern has been amplified by high-speed algorithmic trading. Computers managed by institutional investors quickly react to headline numbers, triggering buy or sell orders based on whether targets are met. Deeper market nuance and context usually emerge later as investors analyze the full report.
This becomes more complex with a company like Tesla. To the Tesla bulls, the company has always been more than a car company. But even as that vision begins to play out, the company’s valuation is tied, in large part, to its electric vehicle (EV) business.
Tesla Delivered Solid Financial Performance
Tesla’s total revenue rose 12% year-over-year to $28.1 billion, exceeding analyst forecasts of $26.4 billion. The company posted strong vehicle deliveries and a last-minute surge in U.S. sales ahead of the expiration of federal EV tax credits.
However, GAAP net income fell to $1.37 billion, or $0.39 per share, down from $2.2 billion in the same quarter last year, due to price cuts and a 50% increase in operating costs linked to AI and R&D investments. Non-GAAP EPS was $0.50, slightly below the expected $0.54, and operating income dropped 40% to $1.6 billion, primarily due to lower regulatory credit revenue.
These results were solid enough. Revenue was up year-over-year, and the company did have some wins in the EV space (more on that below). However, with a stock that trades at around 255x earnings, investors aren’t looking for solid; they want spectacular. This report wasn’t that.
In fact, the report reads more like a tech startup that is light on revenue and years away from profitability. Still, with TSLA stock shaking off the post-earnings sell-off, it appears the Tesla bulls are attempting to mount another charge.
The Legacy EV Business Scored Some Wins
Tesla delivered a record 497,000 vehicles in the third quarter. This was largely due to strong sales of the company’s Model Y in the EMEA and Asia-Pacific regions. The Model Y became the top-selling vehicle in several markets, including Norway, Switzerland, and South Korea. Tesla also launched the Model Y in China and began deliveries in India. The company also expanded its full self-driving (FSD) supervised platform to Australia and New Zealand.
That said, critics will say that the record delivery numbers were expected as consumers pulled through demand ahead of the expiration of the EV tax credit on October 1. They’ll also note that although deliveries were at a record high, the company manufactured fewer vehicles in the quarter on a year-over-year basis.
If your decision to own TSLA stock is based on its EV business, the stock is enormously overvalued. But the reality of the Tesla story is unfolding, and is what analysts may be buying into the day after the report.
The Future That’s Boosting TSLA Stock
Let’s start with the company’s energy business, which doesn’t seem to get enough attention. Tesla reported a deployment of 12.5 GWh of energy storage in the quarter. Much of this was due to growing demand for its Powerwall and Megapack systems. The company also introduced “Megablock,” a next-generation product set for production in 2026.
However, that may be burying the lead. Tesla’s Energy Generation & Storage division posted record quarterly revenue of $3.42 billion. That’s a 44% YoY increase. More significantly, that accounts for approximately 25% of the company’s total revenue. And, it generated $1 billion in profit.
Tesla chief executive officer (CEO) Elon Musk also promoted the company’s progress on the A15 chip. Musk claims the chip is 40x more powerful than its predecessor and will be part of the Cybercab production in 2026. In other news on the autonomous vehicle front, Musk reiterated plans to remove safety drivers from Robotaxi operations in Austin, Texas, by the end of the calendar year.
And then there’s Optimus. This is Musk’s vision of an army of Optimus robots. Musk announced that Optimus V3 will launch in the first quarter of 2026, calling it “remarkable” and saying it will have “fine motor control suitable for medical and manufacturing environments.” Musk went on to say that this represents a $1 trillion opportunity for the company.
TSLA Stock: The More Things Change, the More They Stay the Same
Many investors have made a fortune off TSLA stock; traders, maybe not so much. The company and its CEO have always pitched a bright future. However, that future is filled with waiting and a belief that the vision will become a reality.
In many ways, both Tesla and Elon Musk have earned the benefit of the doubt. Analysts seem to be buying in. TSLA stock has received several upgrades since the report dropped, including a bullish price target of $500 from The Royal Bank of Canada.
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