Key Highlights

● TSLA shares rose 2.20% to $378.73 on Monday, October 5, on about 42 million shares, roughly 15% above normal volume.

● Tesla delivered 486,532 vehicles in the third quarter, ahead of the roughly 457,000 analysts expected, and deployed 13.7 gigawatt-hours of energy storage.

● Through September, Tesla delivered 1,324,681 vehicles, about 9% ahead of last year's pace, and needs about 311,500 fourth-quarter deliveries to top 2025's total.

● Second-quarter Operating Margin was 1.4% and free Cash Flow was negative at about $1.09 billion, with third-quarter results due after the close on October 21.

Tesla (NASDAQ:TSLA) stayed among Monday's most heavily traded stocks on follow-through buying after a third-quarter delivery report that comfortably beat expectations. The electric vehicle maker rose 2.20% to $378.73 on about 42 million shares, roughly 15% above its normal pace, putting close to $16 billion of stock through the market and ranking it fourth by dollar volume. The gain added to a 4.65% jump on Friday, when the delivery numbers were released.

What's driving the volume

On October 2, Tesla reported that it delivered 486,532 vehicles in the third quarter. That was well ahead of the roughly 457,000 that analysts expected, and about 5% above the company-compiled consensus of about 462,000. Deliveries were up about 1% from the second quarter, though down about 2% from the record 497,099 a year earlier, when buyers rushed to claim the federal EV tax Credit before it expired. Tesla produced 464,391 vehicles and deployed 13.7 gigawatt-hours of energy storage, slightly above the second quarter's 13.5.

The bigger takeaway for investors was the full-year trajectory. Through September, Tesla delivered 1,324,681 vehicles, about 9% ahead of last year's pace. It now needs only about 311,500 deliveries in the fourth quarter to top 2025's total, which would mark its first annual increase since 2023 after two straight years of declines. Tesla would clear that bar even if fourth-quarter output fell 25% from last year's level, a cushion that helps explain why buyers kept coming back on Monday rather than taking quick profits after Friday's jump.

Energy storage is another quiet contributor. Deployments of 13.7 gigawatt-hours in the third quarter followed 13.5 in the second, which was up more than 40% from a year earlier. For a company whose car Business faces intense price competition, a steadily growing storage segment adds a second source of hardware Revenue that investors increasingly track alongside vehicle numbers.

Monday's session also brought a Musk-related headline that touches Tesla directly. Elon Musk confirmed that SpaceX (NASDAQ:SPCX) is in early discussions with Taiwan Semiconductor Manufacturing (NYSE:TSM) about Terafab, a proposed chip plant in Texas that would make chips for Tesla vehicles as well as SpaceX. Musk described the talks as "just discussions." The broader market backdrop was supportive as well: the Nasdaq Composite gained 1.05% as softer jobs data eased fears of further Federal Reserve rate hikes, even though the 10-year Treasury Yield rose to 5.31%.

The business

Tesla designs and sells electric vehicles, led by the Model 3 and Model Y, and builds battery storage systems for homes, businesses and utilities. It also sells Full Self-Driving software, operates a growing robotaxi service and is developing the Cybercab and its Optimus humanoid robot. Much of the stock's valuation rests on those newer ventures. FSD subscriptions reached 1.48 million, up 56% from a year earlier, Tesla has expanded its Cybercab robotaxi fleet in Texas, and FSD has won approval in eight European countries.

Recent results and guidance

Tesla's last Earnings report, for the second quarter, showed the gap between Volume and profit that the bears focus on. Revenue rose 26% to a record $28.24 billion, ahead of estimates, but adjusted earnings of 33 cents a share fell well short of the roughly 53 cents analysts expected. Operating margin shrank to just 1.4% from 4.1% a year earlier, and free cash flow was negative at about $1.09 billion as capital expenditures more than doubled to $5.8 billion. Revenue from regulatory credits, once a reliable source of nearly pure profit, collapsed 67% to $146 million after the tax credit expired and fuel-economy penalties that pushed rivals to buy credits were eliminated. Automotive gross margin held up relatively well at 16.8%.

After the delivery beat, the new numbers improved the volume story but not yet the profitability story. Tesla will report third-quarter results after the market closes on October 21.

Valuation

Tesla is by far the most richly valued of the megacaps on Monday's most-active list. Its trailing price-to-earnings ratio is about 352, based on diluted earnings of $1.08 per share over the past year. That compares with about 30 for Nvidia (NASDAQ:NVDA), 38 for Apple (NASDAQ:AAPL) and 20 for Amazon (NASDAQ:AMZN), and it is more than double the 162 multiple of Advanced Micro Devices (NASDAQ:AMD). On forward estimates the picture is not much different: Tesla trades at about 165 times next year's expected earnings. Tesla also earned adjusted EPS of $2.29 in 2024 on delivery volumes similar to what it is on track for this year, while adjusted earnings over the past four quarters totaled just $1.74, illustrating how much margins have compressed.

Wall Street is divided. The consensus rating is buy, but JPMorgan (NYSE:JPM) cut its price target to $415 from $445 on September 28 while keeping a neutral rating.

Bull case

Bulls see 2026 as the turning point. Deliveries are growing again, energy storage is expanding, and the autonomy business is gaining traction with rising FSD subscriptions, robotaxi expansion and European approvals. If Cybercab production and robotaxi services scale, investors argue Tesla's earnings could eventually look very different from those of a traditional automaker, and a potential chip Supply arrangement through Terafab could secure the silicon needed for that strategy.

Bear case

Bears point out that Tesla's profits remain depressed even as volumes recover. Operating margins are thin, free cash flow turned negative in the second quarter, and the high-margin regulatory credit business has largely disappeared. Deliveries are still below last year's third-quarter peak, and the valuation leaves little margin for error if the autonomy timeline slips. Higher bond yields also weigh on stocks whose value depends on profits far in the future.

The October 21 report that will test Tesla's margins

The October 21 earnings report is the key near-term catalyst. Investors will focus on automotive gross margin, operating margin, free cash flow and capital spending plans, as well as updates on Cybercab production, robotaxi expansion and Optimus. Fourth-quarter deliveries will determine whether Tesla secures its first annual sales increase in three years, and any progress on the Terafab talks with TSMC could add another thread to the Musk ecosystem story.