Tesla Stock Slides 4% After-Hours On Q3 Miss: Rising Costs, Tariffs And Musk’s $1 Trillion Pay Plea Rattle Investors

• Operating expenses jumped 50% on AI and R&D spending, while tariffs on auto parts added $400 million in costs.
• Adjusted profit fell short of Koyfin estimates despite record deliveries and a 12% rise in quarterly revenue.
• Retail sentiment on Stocktwits was “extremely bearish,” with traders predicting further downside toward $300–$410.

Tesla Inc.’s shares fell about 4% in extended trading on Wednesday after the electric-vehicle maker posted quarterly profit that missed Wall Street expectations, as rising costs and U.S. tariffs undercut record vehicle deliveries and revenue.

Adjusted earnings for the third quarter (Q3) dropped 31% to $0.50 per share, below Koyfin’s estimate of $0.56, while revenue rose 12% to $28.1 billion, beating Koyfin’s forecast of $26.7 billion. Operating income fell 40% to $1.6 billion, with margin narrowing to 5.8% from 10.8% a year earlier.

Cost Pressures And Tariff Impact

Operating expenses surged 50% to $3.4 billion, driven by increased AI and R&D spending, as well as higher stock-based compensation. Chief Financial Officer Vaibhav Taneja said on the conference call that U.S. tariffs on auto parts cost about $400 million in the quarter.

Total gross margin declined to 18%, while automotive gross margin excluding regulatory credits was 15.4%. Credit revenue declined to $417 million from $739 million a year ago, as policy shifts reduced demand from legacy automakers.

Deliveries And Outlook

Tesla delivered a record 497,099 vehicles, driven by buyers seeking to capture a $7,500 U.S. tax credit before its expiry on Sept. 30. To sustain demand, it launched lower-priced “Standard” versions of the Model 3 and Model Y, a move analysts warned could compress margins further.

CEO Elon Musk reiterated plans to start volume production of the Cybercab robotaxi, Tesla Semi, and Megapack 3 battery system in 2026, and said progress in artificial intelligence and robotics remains a priority.

Analyst Views

Jefferies analyst Philippe Houchois maintained a ‘Hold’ rating and $300 price target, describing the earnings call as “more repetition than news.” He noted the EBIT and margin miss reflected $238 million in one-off charges, adding that Tesla’s auto business no longer drives valuation but continues to generate sufficient free cash flow to fund future projects.

Gary Black, Managing Partner at The Future Fund LLC, said on X that the call was “long on promise but short on specifics.” He noted Musk scaled back the robotaxi rollout from 50% of the U.S. population to 8-10 metro areas, reiterated plans for a steering wheel-free Cybercab by Q2 2026, and discussed Optimus V3 production by late 2026.

Black said Musk’s remarks were “more geared toward engineers than investors,” with technical detail overshadowing clarity on demand trends, pointing to a tone he said contributed to the stock’s decline during the call.

According to Koyfin data, Tesla currently holds an average analyst rating of 3.45 out of 5. Among 47 analysts covering the stock, 16 rate it ‘Buy’, 17 ‘Hold’, 7 ‘Sell’, 5 ‘Strong Buy’, and 2 ‘Strong Sell’.

Musk Defends $1 Trillion Pay Package

Musk, speaking at the end of the conference call, urged shareholders to approve his proposed $1 trillion pay package and criticized proxy advisory firms ISS and Glass Lewis for opposing the plan.

“I just don’t feel comfortable building a robot army here and then being ousted because of some asinine recommendations from ISS and Glass Lewis, who have no freaking clue,” Musk said on the call, adding that he sought “enough voting control to give a strong influence, but not so much that I can’t be fired if I go insane.”

The pay package will go to a vote at Tesla’s annual shareholder meeting on Nov. 6 in Austin. In closing remarks on the call, CFO Vaibhav Taneja reiterated that the board’s compensation committee designed the proposal so Musk would only benefit if shareholders achieved substantial returns and urged investors to support the plan.

Stocktwits Users Brace For More Downside

On Stocktwits, retail sentiment for Tesla was ‘extremely bearish’ amid ‘high’ message volume.

One user said they expected Tesla’s stock to hit $300 by November before sliding to $200 by December, adding they were “not surprised by the earnings.”

Another remarked that the stock was unlikely to climb above $440 in the near term, reflecting short-term skepticism on post-earnings momentum.

A third user warned that Tesla’s valuation required “insane growth” to sustain, predicting a drop toward $410 or lower as growth no longer exceeded expectations.

Tesla’s stock has risen 9% so far in 2025.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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