TSLA

Tesla's Q3 operating income appeared to recover, but over 60% came from tariff refunds rather than core business improvement. Revenue was flat year-over-year at $28.0 billion, marking significant deceleration. While Megapack energy storage shows promise and Robotaxi could become profitable in 2027, the analyst recommends waiting for operating income growth without refunds and concrete Robotaxi profitability metrics before buying, citing elevated valuation at 420x trailing earnings.

The article argues that a potential merger between SpaceX and Tesla would be detrimental to SpaceX investors. Tesla's valuation appears inflated at $1.53 trillion with a P/E ratio of 200, driven almost entirely by unproven future products like Optimus robots and full self-driving capabilities.

Meanwhile, Tesla's core automotive business shows flat revenue growth and declining deliveries. SpaceX, which is experiencing rapid growth from its AI infrastructure business and profitable Starlink division, would overpay for Tesla's bloated valuation. The author recommends SpaceX investors reject the merger unless Tesla's price decreases or it demonstrates financial success with its autonomy products.

SpaceX shares fell 9.1% on October 22, 2026, due to concerns over massive capital expenditures needed for AI expansion and uncertainty surrounding potential merger talks with Tesla. The company reported $16 billion in capex with projections of $35-40 billion in Q4, resulting in negative free cash flow. Additionally, Reuters reported that some involved in Tesla merger discussions worry that Musk's public endorsement could trigger unwanted scrutiny and delays.