Tesla shares moved sharply in extended trading after the electric vehicle maker posted third-quarter results that beat expectations, while investors digested fresh signals around a possible merger with SpaceX and a strikingly bullish long-term valuation model from Cathie Wood's Ark Invest.
Tesla closed Tuesday's regular session at $373.71, up 2%, and added another 2.2% after hours to reach $382.15. The move came after Elon Musk said during SpaceX's third-quarter earnings call that SpaceX and Tesla had each formed independent special committees to evaluate a potential combination. Musk described the deal as a “good idea” but stressed that no terms are final and any merger would require approval from at least 50% of all outstanding Tesla stock.
RBC outlined a hypothetical all-stock transaction in which SpaceX would buy Tesla at $480 per share, valuing the combined company at $3.74 trillion. Cantor Fitzgerald repeated its Overweight rating and $485 price target on Tesla ahead of Wednesday's earnings report. Options traders also leaned bullish, with the put-to-call ratio on near-term contracts at 0.47.
Ark Invest published a new long-term note setting a base-case target of $4,400 for Tesla in 2031, with a bull case of $5,000 and a bear case of $3,300. Ark expects robotaxis to account for about 80% of Tesla's enterprise value by 2031, down from roughly 90% in its 2024 model for 2029. The firm also modeled contributions from Optimus robot-as-a-service and Terafab. Ark said a SpaceX and Tesla merger could happen within five years and estimated the pair could generate $3.8 trillion in revenue and $2.7 trillion in EBIT by 2031, with SpaceX contributing about 62% of revenue and 69% of EBIT. Ark's own valuation model still treats Tesla as a standalone business.
Tesla's actual Q3 results added fundamental support. Revenue came in at $28.05 billion for the three months ended September 30, slightly above the $27.88 billion consensus estimate. Adjusted earnings per share reached 48 cents, beating the 43 cents analysts expected. Tesla shares rose around 2% in extended trading following the release.
Deliveries rebounded to 486,532 vehicles, above Wall Street's expectation of about 461,100, although the figure was down roughly 2% from a year earlier. Production reached 464,391 units, meaning deliveries exceeded output by more than 22,000 vehicles for a second consecutive quarter. Model 3 and Model Y accounted for nearly all deliveries, while other models including Cybertruck delivered 8,295 units, down from 12,364 in the second quarter. Tesla has discontinued Model S and Model X production at Fremont as it prepares to replace those lines with its first large-scale Optimus humanoid robot production line.
Capital expenditure was $4.73 billion, well below the roughly $7.5 billion analysts expected, while free cash flow reached $1.53 billion against forecasts for a $4.92 billion outflow. The company has targeted about $25 billion in capital expenditure this year and arranged $30 billion in loans and credit lines. Tesla also said its energy storage business is becoming a more important contributor, though the current tariff regime is expected to affect energy operations more than automotive.
Meanwhile, Tesla's autonomous driving expansion continues. The company said its Cybercab fleet in Austin grew from fewer than 40 vehicles to more than 300 in about a month, with Dallas identified as the next expansion market. Tesla has also launched unsupervised robotaxi rides in Miami, Orlando and Tampa, following launches in Dallas and Houston.
Despite the after-hours gains, Tesla shares remain about 14% lower for the year. The company is still the world's most valuable automaker with a market capitalization of approximately $1.4 trillion. SpaceX shares jumped 8% in after-hours trading following its own third-quarter report, while the Nasdaq gained 0.8% and the S&P 500 added 0.3% in Tuesday's regular session.
