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Tesla beats earnings projections after Musk floats SpaceX merger plan
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Tesla reported better-than-expected third-quarter earnings on Wednesday, beating Wall Street projections. Revenue was $28.05bn and earnings per share $0.48, surpassing estimates of $27.9bn and $0.43. Investors sought details on CEO Elon Musk's floated idea of merging Tesla with SpaceX, but Musk declined to elaborate further.
The merger speculation began Tuesday when Musk told SpaceX investors that combining the two companies would be a "good idea." He said both boards had formed special committees to explore the transaction, which would need approval from 50% of Tesla shareholders. On Wednesday, Musk said he had "said everything that should be said yesterday."
Despite the earnings beat, revenue slightly declined from $28.23bn last quarter, and automotive revenue dropped 3% year-over-year. Tesla highlighted momentum in "Super Intelligence, robotics and renewable energy." The stock has fallen over 11% this year amid competition from cheaper Chinese automakers, though it rebounded after the merger news.
The potential SpaceX merger remains undefined, with no terms or timeline disclosed. The special committees have not reached an agreement, and Musk's dual CEO role raises governance questions. The 50% shareholder approval threshold is a significant hurdle.
The earnings call also focused on Tesla's pivot toward AI and robotics. Musk touted the Optimus humanoid robot as "the biggest product on earth," despite production hurdles. The Robotaxi service has struggled to scale. Forrester analyst Paul Miller noted that Tesla "continues to miss some of its leaders' bolder bets."
Industry reactions were mixed. Some investors welcomed the earnings beat but expressed frustration over the lack of merger details. Last week's flying Roadster 2 demo, which Musk called "the coolest demo of any product ever," generated buzz but also skepticism. Musk admitted the $200,000 vehicle might not be legal everywhere.
Looking ahead, Tesla's valuation increasingly depends on AI and robotics rather than vehicle sales. Musk reiterated that Optimus will dominate the humanoid robot market, but he has a history of missing targets. The company must balance its core auto business with high-risk ventures.
The merger idea fits Musk's pattern of consolidating his business empire. Combining Tesla and SpaceX could create synergies in AI and manufacturing, but it raises concerns about focus and conflicts of interest. As Tesla navigates falling car revenue and rising competition, the coming months will test whether Musk's bold vision can deliver sustainable growth.
