Tesla shares fell 3.2% in extended trading after the company reported third-quarter results. While revenue hit $28.05 billion, the core automotive business struggled. Elon Musk said a potential SpaceX merger remains "quite a high hurdle." Tesla also cut its annual spending plans to $20 billion amid ongoing supply issues.
Electric car manufacturer Tesla Inc., owned by Elon Musk, surpassed expectations in the third quarter across key parameters, but the stock fell in extended trading as its core business continued to struggle and the company cut back on spending plans for the full year.
For the third quarter, Tesla's revenue of $28.05 billion was higher than the $27.9 billion estimate, while its Earnings per Share (EPS) of $0.48 was marginally above the $0.43 estimate.
Tesla's core automotive business saw revenue decline 3% from last year, while revenue from its energy vertical saw a 16% drop from last year. The company said that lower selling prices and supply issues for batteries were behind the sluggish sales figures for the core business.
The company's profitability also dropped from last year, its free cash flow fell 62%, while capex more than doubled from the year-ago period, which still missed expectations.
As a result, Tesla has cut back on its spending plans for the year and plans to spend around $20 billion instead of the revised $25 billion target earlier this year. Tesla spent $4.73 billion during the quarter, while analysts had expected a figure of $7.95 billion.
The merger question with SpaceX was again brought up during the earnings call, to which Elon Musk said it felt as if he is "tapdancing through a minefield." He also highlighted that any potential merger will require the approval of at least 50% of Tesla's shareholders, which, according to him, is "quite a high hurdle."
Analysts tracking Tesla questioned the capex cut, stating that it will be a positive only if it does not come at the expense of future growth. They added that clarity will be needed on whether the spending is simply shifting between quarters or whether the ramp-up is taking longer than expected.
Shares of Tesla fell 3.2% in extended trading, having gained 3.4% in the regular trading session to $386.47. The stock is down 12% so far this year, underperforming the S&P 500's 13% gain.