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3Q26 results were above our expectations with 9M26 revenue/adj. PATMI at 82%/84% of our FY26e forecasts. Adj. PATMI (excl. SBC and fair value changes on bitcoin and SpaceX shares) fell 4% YoY to US$1.7bn, as a 39% rise in OPEX and a 73% fall in regulatory credits offset a 9% rise in gross profit. Revenue was flat YoY at US$28.0bn.
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Deliveries fell 2% YoY to 487k against a 3Q25 base lifted by buying ahead of the US EV tax credit expiry. Deliveries exceeded production by 22k units, leaving inventory at 11 days of supply (3Q25: 10 days). Active FSD subscriptions rose 67% YoY to 1.74mn. FY26e capex guidance was cut to ~US$20bn (prev. >US$25bn), and FCF fell 62% YoY to US$1.5bn as capex more than doubled to US$4.7bn.
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We maintain our SELL recommendation. We lift our target price to US$230 (prev. US$220) as we raise FY26e earnings by 8% from higher auto revenue estimates. Our WACC/growth rate assumptions of 9%/5% remain unchanged. We remain cautious on TSLA. A 39% YoY rise in OPEX cut operating margin to 2.6% (3Q25: 5.8%). OPEX will keep rising until Optimus, Cybercab and Semi sell in volume, as TSLA pays for SI compute, chip design, and new production lines before they earn revenue. We view a merger with SPCX as positive move, as they would own part of a faster growing business that made ~4x TSLA’s operating profit in 3Q26. The main drawback is that TSLA’s US$45bn of cash would go towards SPCX’s heavy capex.
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