Tesla Heads Into Wednesday Earnings Weighed Down by Slowing Growth as SpaceX Merger Speculation and Musk's $10.7 Billion Share Giveaway Dominate the Week

Tesla enters its third-quarter earnings report on Wednesday after the close facing a consensus revenue estimate of roughly $28.1 billion, essentially flat from a year ago, with earnings per share expected around $0.45 versus $0.50 in the prior-year period. Third-quarter deliveries came in at 486,532 vehicles on production of 464,391 units, slightly below the year-ago period. The stock ended last week around $354, nearly 30% below its December high, though it rebounded roughly 3.76% on Monday as broader tech markets recovered, with the Nasdaq 100 rising 1.2% and the S&P 500 gaining 0.4%.

Free cash flow is a central concern heading into the report. Tesla posted negative free cash flow of $1.1 billion in the second quarter as capital expenditures reached $5.8 billion, and Elon Musk has outlined plans to invest roughly $25 billion across AI infrastructure, data centers, the Optimus humanoid robot, and the Cybercab autonomous vehicle. Options traders are leaning bullish, with a put/call volume ratio of 0.53 and heavy call concentration around the $370 strike, implying about 4.5% upside. Analyst price targets range widely, from Jefferies at $400 to Tigress Financial at $550, with an average near $412 and JPMorgan at $415.

Merger speculation between Tesla and SpaceX intensified ahead of earnings and dominated market conversation throughout Monday. RBC analysts said SpaceX could acquire Tesla at $480 per share in a deal valuing the combined entity at $3.74 trillion, while investor Gary Black publicly predicted a SpaceX buyout of Tesla at $420 per share within weeks. Kalshi prediction markets priced the odds of a merger before February 2027 at 67%, up from roughly 30% earlier in the month, and Polymarket placed the chance of a Tesla-SpaceX merger being announced by end of 2027 at 64%. A Tesla SEC proxy filing revealing SpaceX board ties and change-of-control provisions added fuel to the speculation. Tesla separately confirmed its annual shareholder meeting for December 3, where it will ask investors to re-elect Musk, Chairwoman Robyn Denholm, and JB Straubel.

A demonstration of a next-generation Tesla Roadster on October 15 at SpaceX's McGregor, Texas facility drew renewed attention to the merger thesis. The Roadster incorporates SpaceX-derived thruster technology and is now targeted for a 2028 production date, eight years past its original 2017 delivery goal. Florida Governor Ron DeSantis said he would make the flying Roadster legal in his state. Musk separately claimed the car would be