To The Moon

Tesla gave investors plenty to react to this week. Elon Musk floated a potential SpaceX merger, then Tesla beat quarterly revenue and adjusted earnings estimates. The stock still fell more than 3% after hours. That leaves investors with a tough choice: take profits now, or hold for more gains? $Tesla Motors(TSLA)$

Congratulations to @DaveYap for a $20,498 gain on Tesla, and @thisishanong for a $38,805 gain!

Why did Tesla fall after beating expectations?

Tesla reported revenue of $28.05 billion, above the $27.9 billion expected. Adjusted earnings were 48 cents per share, beating the 43-cent forecast from analysts polled by LSEG.

But sales were roughly flat compared with a year ago. Automotive revenue fell 3%, and energy revenue dropped 16%. Growth in services and other revenue helped make up the difference.

There was some good news in the car business. Automotive gross margin, excluding regulatory credits, rose to 18.1% from 16.3% last quarter. In simple terms, Tesla kept more profit from each dollar of automotive revenue before operating expenses.

The problem? Expenses rose much faster.

Gross profit increased by about $440 million, but operating expenses climbed by roughly $1.35 billion. Research and development spending rose around 69%. As a result, operating profit fell 56%.Tesla’s margins improved, but the extra spending more than used up those gains.

FSD is growing. Robotaxi needs more time.

According to CNBC, active FSD subscriptions rose 67% to 1.74 million from a year earlier.

More paying subscribers could help Tesla keep earning money after it sells a car. But investors still need to see whether customers renew and how much profit the subscriptions generate. The current FSD system also requires driver supervision—it is not fully driverless.

Robotaxi could become another source of income, but running the service costs money. Tesla expects to own most Cybercabs, so it will pay for the vehicles, charging, repairs and cleaning.

More robotaxis on the road won’t automatically mean more profit. Each vehicle needs to earn enough to cover its costs.

Musk expects Robotaxi’s financial contribution to become more noticeable around the second quarter of 2027. Optimus also needs more work on reliability and AI.

Both could help Tesla grow, but neither is making a major contribution to profit today.

Cash flow is better—but still below last year

Tesla generated $1.53 billion in free cash flow, the cash left after capital spending. That was an improvement from the previous quarter, when free cash flow was negative.

Cash from operations was stronger than expected, while capital spending was lower than forecast. However, free cash flow was still down about 62% from a year ago.

The results show some progress: better automotive margins, more FSD subscribers and positive free cash flow.

What Tesla still needs to show is lasting profit growth. That will depend on whether revenue grows fast enough to cover its rising costs—and whether Robotaxi and robotics deliver on expectations.

If you were up $38,800 on Tesla, would you sell some shares or keep holding? If you don’t own it, would you buy the dip? $Tesla Motors(TSLA)$

Share your thoughts in the comments, and feel free to show us your Tesla positions and gains!

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