Tesla returns to positive FCF, but earnings remain under pressure – TSLA stock forecast

Tesla has improved its operating margin and returned to positive free cash flow, but the high cost of new projects continues to weigh on earnings. The TSLA stock forecast remains negative, while a break below support at 350 USD could open the way for further declines.

In Q3 2026, Tesla’s (NASDAQ: TSLA) financial results improved compared with the spring. The operating margin rose from 1.4% to 2.6%, while free cash flow returned to positive territory. Revenue reached 28.05 billion USD, remaining virtually unchanged year-on-year. Adjusted net income surged 47% from the previous quarter but was 4% lower than a year earlier due to significant spending on AI, robots, and new products.

To ease budget pressure, Tesla cut its full-year capital expenditure forecast from 25 billion USD to 20 billion USD. The company is focusing on its Robotaxi service, Cybercab autonomous vehicles, Semi trucks, Optimus robots, and energy business. Robotaxi is expected to become profitable in 2027, while sales of Optimus robots to external customers are planned to begin by the end of 2027.

This article analyses Tesla shares following the Q3 2026 report, examining the company’s main revenue sources, financial results, and business risks. It also provides a fundamental analysis of TSLA, analyst forecasts, and a technical analysis of TSLA, which form the basis for a TSLA stock forecast following the quarterly report.

About Tesla, Inc.

Tesla was founded in 2003 by Martin Eberhard and Marc Tarpenning. In 2004, Elon Musk joined the co-founders, becoming the company’s largest investor and taking on the role of Chair of the Board of Directors. In 2008, Musk became the company’s CEO.

Initially, the company focused exclusively on producing electric vehicles, but over time it expanded into new business areas. Tesla began producing the Roadster in 2008, after unveiling its prototype in 2006. Tesla subsequently developed the Autopilot and Full Self-Driving (Supervised) driver-assistance systems. The consumer version of FSD requires continuous driver supervision and does not make the vehicle fully autonomous.

In 2015, Tesla launched its energy business, Tesla Energy, while the acquisition of SolarCity in 2016 expanded its presence in the solar energy market. Today, the company produces energy storage systems, is developing its Robotaxi service, and ramping up production of the Tesla Semi electric truck. Additional areas of development include the Optimus humanoid robot and computing infrastructure for artificial intelligence training.

Tesla, Inc.’s main revenue streams

Tesla, Inc. generates revenue from various sources, reflecting the diversity of its products and services. The main sources are listed below:

• Automotive: vehicle sales and leasing, regulatory credits, and vehicle-related software features, including FSD.
• Energy generation and storage: sales and installation of solar energy systems and energy storage products, including Powerwall and Megapack.
• Services and other revenue: vehicle servicing and repairs, Supercharger charging infrastructure, insurance, and sales of used vehicles and parts.

Tesla, Inc. Q3 2024 financial results

On 23 October, Teslapublished its Q3 2024 financial results. The key figures are presented below:

• Total revenue: 25.18 billion USD (+8%)
• Net income: 2.51 billion USD (+8%)
• Earnings per share: 0.72 USD (+9%)
• Operating margin: 10.8% (+323 basis points)
• Capital expenditure: 3.51 billion USD (+43%)

Revenue by segment:

• Automotive revenue: 20.02 billion USD (+2%)
• Energy generation and storage: 2.38 billion USD (+52%)
• Services and other revenue: 2.79 billion USD (+29%)

In its commentary on the results, Tesla’s management noted that despite revenue of 25.18 billion USD falling short of the Wall Street consensus estimate of 25.47 billion USD, the company exceeded earnings expectations, reporting 0.72 USD per share compared with the expected 0.60 USD. This was driven by an increase in gross margin from lower per-vehicle production costs. In Q3 2024, Tesla delivered 462,890 electric vehicles. This was below the all-time high set in Q4 2023, when the company delivered 484,507 vehicles to customers.

Tesla planned to launch more affordable vehicle models in H1 2025, expecting sales to grow by 20–30% the following year. Mass production of the Cybercab was scheduled to begin in 2026. Over the longer term, management expected production to reach at least 2 million vehicles annually, although this target did not imply that the company would produce that many vehicles in 2026. In addition, Tesla reported that its 4680 battery cell technology was approaching cost competitiveness, which could significantly alter the economics of battery production.

Tesla, Inc. Q4 2024 financial results

On 29 January, Tesla published its Q4 2024 financial results, which showed that the company’s net income fell 15%. The key figures are presented below:

• Total revenue: 25.71 billion USD (+2%)
• Net income: 2.11 billion USD (–15%)
• Earnings per share: 0.60 USD (–16%)
• Operating margin: 6.2% (–204 basis points)
• Capital expenditure: 2.78 billion USD (+21%)

Revenue by segment:

• Automotive revenue: 19.80 billion USD (–8%)
• Energy generation and storage: 3.06 billion USD (+113%)
• Services and other revenue: 2.85 billion USD (+31%)

Tesla set a quarterly delivery record in Q4 2024, delivering 495,570 vehicles. In 2024, the Tesla Model Y remained one of the world’s best-selling car models. Tesla’s energy storage business also recorded significant growth, driven by increased demand for products such as Megapack and Powerwall.

The company continued developing FSD (Supervised), expanding its driver-assistance capabilities. For 2025, Tesla expected its automotive business to return to growth, but did not provide a specific percentage. The forecast called for at least 50% growth in energy storage deployments.

Elon Musk’s comments on Optimus robots are also worth noting. He expressed confidence that several thousand Optimus robots would be capable of performing practical tasks by the end of 2025. Initially, Tesla would test and use them at its factories. He emphasised the importance of robotics and AI to Tesla’s future, viewing them as a foundation for long-term business growth and increased company value.

Tesla, Inc. Q1 2025 financial results

On 22 April, Teslapublished its Q1 2025 financial results, which fell short of expectations. The key figures are presented below:

• Total revenue: 19.34 billion USD (–9%)
• Net income (non-GAAP): 0.93 billion USD (–39%)
• Earnings per share (non-GAAP): 0.27 USD (–40%)
• Operating margin: 2.1% (–343 basis points)
• Operating expenses: 2.75 billion USD (+9%)
• Capital expenditure: 1.49 billion USD (–46%)

Revenue by segment:

• Automotive revenue: 13.97 billion USD (–20%)
• Energy generation and storage: 2.73 billion USD (+67%)
• Services and other revenue: 2.64 billion USD (+15%)

Tesla’s Q1 2025 results reflected a challenging period for the company. Financial performance fell short of expectations, with non-GAAP earnings per share coming in at 0.27 USD against a forecast of 0.42 USD. The automotive segment, the company’s main revenue source, declined 20% due to a 13% drop in deliveries and a lower average selling price. These results reflect the impact of the temporary suspension of Model Y production, price reductions, and the company’s reliance on regulatory credits, which generated 595 million USD in revenue. All else being equal, without this revenue, Tesla would have reported an operating loss of around 196 million USD. Macroeconomic factors, uncertainty around trade policy, and reputational risks tied to Elon Musk’s public activities further complicated the company’s position.

Nevertheless, Tesla’s energy business increased revenue by 67% and achieved record gross profit, confirming the company’s success in the energy storage segment. Free cash flow returned to positive territory at 664 million USD, compared with a deficit of 2.53 billion USD a year earlier, indicating effective capital management amid significant investment in artificial intelligence.

The development of autonomous technologies remained one of Tesla’s key priorities. The company planned to launch a paid Robotaxi service in Austin in June 2025. Further expansion depended on technological improvements and obtaining the necessary regulatory approvals.

The Optimus humanoid robot project, with a target of producing 1 million units annually by 2029, highlighted Tesla’s ambitions to expand beyond automotive manufacturing.

Tesla’s management did not provide specific guidance for Q2 2025. Instead, management said it would revisit its 2025 outlook after releasing Q2 2025 results, citing uncertainty in the automotive and energy markets due to changing trade policies and macroeconomic conditions. Analyst estimates for Q2 2025 projected revenue of approximately 24.45 billion USD, but the company itself refrained from confirming or refining these figures.

Tesla, Inc. Q2 2025 financial results

On 23 July, Teslapublished its Q2 2025 financial results. The key figures compared with the same period in 2024 are presented below:

• Total revenue: 22.50 billion USD (–12%)
• Net income (non-GAAP): 1.39 billion USD (–23%)
• Earnings per share (non-GAAP): 0.40 USD (–23%)
• Operating margin: 4.1% (–220 basis points)
• Operating expenses: 2.96 billion USD (–1%)
• Capital expenditure: 2.39 billion USD (+5%)

Revenue by segment:

• Automotive revenue: 16.66 billion USD (–16%)
• Energy generation and storage: 2.79 billion USD (–7%)
• Services and other revenue: 3.05 billion USD (+17%)

Tesla reported weak financial results for Q2 2025. Revenue declined 12% year-on-year to 22.50 billion USD, while adjusted net income fell 23% to 1.39 billion USD. The automotive business was the main source of pressure, with revenue falling 16% to 16.66 billion USD. The company delivered 384,122 vehicles, down 13.5% from a year earlier.

In Q2, Tesla faced weaker demand for its vehicles, intensifying competition, and pricing pressure. Trade barriers and reputational risks associated with Elon Musk’s political activities created additional challenges. The upcoming expiry of the US federal tax credit after 30 September 2025 added to uncertainty surrounding future sales.

For Q3 2025, management once again did not provide guidance on key financial metrics. Instead, Elon Musk warned that the coming quarters could be difficult, citing macroeconomic challenges, the expiry of US government incentives, new tariffs on Chinese components, and regulatory uncertainty around autonomous vehicles.

Tesla, Inc. Q3 2025 financial results

On 22 October, Teslapublished its Q3 2025 financial results. The key figures compared with the same period in 2024 are presented below:

• Total revenue: 28.10 billion USD (+12%)
• Net income (non-GAAP): 1.77 billion USD (–29%)
• Earnings per share (non-GAAP): 0.50 USD (–31%)
• Operating margin: 5.8% (–501 basis points)
• Operating expenses: 3.43 billion USD (+50%)
• Capital expenditure: 2.25 billion USD (–36%)

Revenue by segment:

• Automotive revenue: 21.21 billion USD (+6%)
• Energy generation and storage: 3.42 billion USD (+44%)
• Services and other revenue: 3.48 billion USD (+25%)

In Q3 2025, Tesla delivered a record 497,099 electric vehicles (+7% year-on-year), supported by a surge in US demand ahead of the expiry of the 7,500 USD tax credit. The energy business also reached a record, with 12.5 GWh of energy storage deployments.

Revenue rose to a record high, but earnings declined because of higher costs and a shift in the revenue mix. Margins narrowed as vehicle production costs rose, regulatory credit revenue declined, and, unlike the previous year, there was no one-off FSD-related revenue. At the same time, research and administrative expenses increased, causing operating income to fall 40% year-on-year. Tesla also posted record free cash flow of 3.99 billion USD and increased cash reserves to 41.6 billion USD.

Once again, the company did not provide specific guidance for the following quarter, citing risks related to tariffs, trade policy, and changes in government support.

Tesla, Inc. Q4 2025 financial results

On 28 January, Teslapublished its Q4 2025 financial results. The key figures compared with the same period in 2024 are as follows:

• Total revenue: 24.90 billion USD (–3%)
• Net income (non-GAAP): 1.76 billion USD (–16%)
• Earnings per share (non-GAAP): 0.50 USD (–17%)
• Operating margin: 5.7% (–50 basis points)
• Operating expenses: 3.60 billion USD (+39%)
• Capital expenditure: 2.39 billion USD (–14%)

Revenue by segment:

• Automotive revenue: 17.69 billion USD (–11%)
• Energy generation and storage: 3.84 billion USD (+25%)
• Services and other revenue: 3.37 billion USD (+18%)

For Q4 2025, Tesla reported earnings per share of 0.50 USD and revenue of 24.9 billion USD, exceeding market expectations. Gross margin reached a two-year high of 20.1%. For full-year 2025, revenue totalled 94.8 billion USD, down slightly from 2024.

For the first time, the company disclosed the number of active FSD subscribers, which reached 1.1 million, significantly higher than a year earlier. At the same time, the energy business maintained strong growth, with revenue rising 25% year-on-year despite declining automotive sales.

Because cryptocurrency prices fell, the company recorded an unrealised loss of 307 million USD before tax, or about 239 million USD after tax.

Tesla did not provide specific revenue or delivery figures for Q1 2026. However, the company outlined an aggressive plan for full-year 2026, focused on capital expenditure and a shift in its manufacturing priorities.

The company officiallyannounced it would end production of the Model S and Model X and convert its Fremont factory to mass-produce Optimus robots, targeting a capacity of 1 million units annually.

Tesla, Inc. Q1 2026 financial results

On 22 April, Teslapublished its Q1 2026 financial results. The key figures compared with the same period in 2025 are as follows:

• Total revenue: 22.39 billion USD (+16%)
• Net income: 1.45 billion USD (+56%)
• Earnings per share: 0.41 USD (+52%)
• Operating margin: 4.2% (+214 basis points)
• Operating expenses: 3.78 billion USD (+37%)
• Capital expenditure: 2.49 billion USD (+67%)

Revenue by segment:

• Automotive revenue: 16.23 billion USD (+16%)
• Energy generation and storage: 2.41 billion USD (–12%)
• Services and other revenue: 3.75 billion USD (+42%)

In Q1 2026, Tesla increased both revenue and net income compared with the same period a year earlier. However, profit declined compared with Q4 2025. The company’s substantial cash reserves continued to support its investment capacity.

Electric vehicle sales drove most of the growth, recovering during the quarter, while interest in the paid Full Self-Driving (FSD) service also increased. At the same time, the energy business, which had previously provided significant support to the company, temporarily lost momentum during the quarter.

Tesla lowered its cash flow outlook for the remainder of 2026 because planned investment increased. The company expected full-year capital expenditure of around 25 billion USD, up from the previously announced 20 billion USD. CFO Vaibhav Taneja also warned that free cash flow would likely be negative in the remaining quarters of 2026.

Tesla, Inc. Q2 2026 financial results

On 22 July, Teslapublished its Q2 2026 financial results. The key figures compared with the same period in 2025 are as follows:

• Total revenue: 28.24 billion USD (+26%)
• Net income: 1.15 billion USD (–17%)
• Earnings per share: 0.33 USD (–18%)
• Operating margin: 1.4% (–270 basis points)
• Operating income: 398 million USD (–57%)
• Free cash flow: –1.09 billion USD (compared with +146 million USD a year earlier)
• Capital expenditure: 5.79 billion USD (+142%)

Revenue by segment:

• Automotive revenue: 20.52 billion USD (+23%)
• Energy generation and storage: 3.14 billion USD (+13%)
• Services and other revenue: 4.58 billion USD (+50%)

In Q2 2026, Tesla increased total revenue by 26%, but profitability declined. Revenue growth was supported by record second-quarter deliveries of 480,126 vehicles, as well as higher revenue from the energy and services businesses. The automotive segment itself recorded a 23% increase in revenue.

However, operating income plunged 57%, while the operating margin fell to a record low of 1.4%. The sharp decline in profit was driven by substantial spending on new projects, personnel, and AI development. These large-scale investments pushed Tesla’s free cash flow into negative territory.

Tesla continues to successfully increase sales and invest billions in future technologies such as Robotaxi and the Optimus robot, but the company’s current operating efficiency has temporarily declined.

Tesla’s outlook for the coming quarters remains investment-heavy. At the time of the Q2 report, the company expected capital expenditure to exceed 25 billion USD in 2026 and to continue rising over the next 2–3 years as it expands Robotaxi, Optimus, semiconductor development, solar manufacturing, and AI infrastructure.

Tesla, Inc. Q3 2026 financial results

On 21 October, Teslapublished its Q3 2026 financial results. The key figures compared with the same period in 2025 are as follows:

• Total revenue: 28.05 billion USD (0%)
• Net income: 1.70 billion USD (–4%)
• Earnings per share: 0.48 USD (–4%)
• Operating margin: 2.6% (–322 basis points)
• Operating income: 718 million USD (–56%)
• Free cash flow: 1.53 billion USD (–62%)
• Capital expenditure: 4.73 billion USD (+110%)

Revenue by segment:

• Automotive revenue: 20.56 billion USD (–3%)
• Energy generation and storage: 2.88 billion USD (–16%)
• Services and other revenue: 4.61 billion USD (+33%)

In Q3 2026, Tesla improved its operating margin and returned to positive free cash flow. Adjusted net income rose 47% from the previous quarter but remained 4% below the year-earlier level. Spending on AI, robotics, and new product development continues to weigh on the company’s profitability.

The main positive development was that Tesla generated more profit from vehicle sales after production costs. This was supported by a more favourable sales mix across countries and models, as well as additional customer payments for FSD software.

Another important positive was the cash Tesla had left after operating expenses and investment in equipment and construction. The company was expected to spend more cash than it generated, but it ended the quarter with a positive balance. This improves its ability to fund its development internally.

In addition, Tesla lowered its 2026 capital expenditure forecast from more than 25 billion USD to around 20 billion USD. This reduces its near-term funding requirements but raises questions about the pace of new project implementation.

The picture in the energy storage business was also mixed. Tesla deployed more energy storage systems but generated less revenue from the business than a year earlier. The result was affected, among other factors, by tariff-related customer reimbursements.

Growth in the number of paying FSD users was more encouraging. Customers are increasingly paying Tesla for additional vehicle features, and the company is already seeing a financial benefit from this.

The timing of new business development was one reason for caution following the report. Management expects Robotaxi to make a meaningful contribution in 2027, while deliveries of Optimus robots to external customers are expected closer to the end of that year. Until then, Tesla will continue funding development and production preparations. These projects could become significant revenue sources, but for now the company is incurring costs before generating comparable returns.

Overall, the quarter provides grounds for cautious optimism: Tesla improved the profitability of its automotive business and generated more free cash flow than expected. The next step is to sustain these improvements and show that revenue is beginning to grow faster than expenses.

Tesla, Inc. key valuation multiples analysis

Below are Tesla’s key valuation multiples following its Q3 2026 financial results, calculated at a share price of 386 USD.

Key figures used in the calculations:

• TTM revenue – 103.57 billion USD
• TTM operating income (EBIT) – 3.47 billion USD
• TTM free cash flow – 3.30 billion USD
• TTM diluted EPS (non-GAAP) – 1.72 USD
• Cash and short-term investments – 45.45 billion USD
• Debt including finance leases – 9.52 billion USD
• Net cash position – 35.92 billion USD
• Estimated EV – 1.49 trillion USD