Tesla stock drops 2.9% after Q3 earnings mask weak margins

Tesla's stock fell 2.9% in after-hours trading to $375.19 on Wednesday following its Q3 2026 earnings report, which masked a significant deterioration in core business fundamentals despite beating surface-level expectations. The adjusted earnings per share of $0.48 and revenue of $28.05 billion slightly exceeded estimates, but GAAP net income plunged 43% year-over-year to $787 million, while operating income dropped 56% to $718 million, compressing margins to 2.6% from 5.8%. Vehicle revenue declined 3% to $20.56 billion due to lower average selling prices and battery supply constraints. CEO Elon Musk's cautious comments on robotics and chip production, plus his refusal to detail a potential SpaceX merger, further pressured the stock. Musk noted the Optimus robot needs more development, regulatory hurdles remain for robotaxi, and the Terafab chip venture could cost over $100 billion.