Tesla’s (Nasdaq: TSLA) third-quarter profit fell 43% as spending on AI and robotics climbed while sales stayed flat, and CEO Elon Musk offered no new details Wednesday on a possible tie-up with SpaceX that he endorsed a day earlier.
Tesla reported net income of $787 million for the quarter that ended September 30, equal to 22 cents a share and down from $1.37 billion a year earlier, while revenue held at $28.05 billion, according to its filing with the Securities and Exchange Commission.
Operating profit slid 56% to $718 million, and the operating margin narrowed to 2.6% from 5.8%. Research and development spending leapt 69% to $2.76 billion, on AI, Optimus robots and the Cybercab, and capital spending more than doubled to $4.73 billion, which cut free cash flow 62% to $1.53 billion.
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Excluding certain items, earnings came to 48 cents a share, down from 50 cents a year earlier but above the 45 cents analysts expected. Deliveries totaled 486,532 vehicles, a 2% decline. The results also reflect a $142 million paper loss on Tesla’s stake in SpaceX and a $288 million paper gain on digital assets.
SpaceX (Nasdaq: SPCX), which listed on the Nasdaq in June, set the stage a day earlier. Musk said on its earnings call Tuesday that SpaceX and Tesla each formed a committee of independent board members to weigh a combination, at shareholders’ request, and that he is sitting out the talks because of his conflict of interest.
He called a merger a good idea but warned against treating it as certain, saying it would need a majority of Tesla’s shares to approve, a hurdle he described as high. As of June 30, Musk owned about 48% of SpaceX and controlled roughly 82% of its votes.
Musk opened Tesla’s call Wednesday by saying, “I think I said everything that should be said yesterday.” Travis Axelrod, Tesla’s head of investor relations, then said the company would take no questions on a merger. Tesla shares rose 3.6% in regular trading Wednesday and 1.6% more after the report.
The two companies posted sharply different quarters. SpaceX reported net income of $4.4 billion on $14.6 billion in revenue, compared with a $1.1 billion loss a year earlier. SpaceX is now worth more than $2 trillion, while Tesla is worth nearly $1.5 trillion.
