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Tesla Q3 narrative dominated by strong margins: What Wall Street is saying

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Tesla’s entire narrative related to the third quarter is based on the strong margins it reported, which are a big reason why the stock is doing so well on Thursday, just one day after the Q3 report.

Wall Street has been looking for that strong display from Tesla for several quarters. From a financial standpoint, things have been good — but not great.

Analysts are now drooling over what Tesla reported — a 19.8 percent non-GAAP gross margin, and a 17.05 percent gross margin from automotive alone.

Tesla stock spikes over 20% on strong margins and 2025 guidance

This is truly what analysts have been waiting to see, and along with CEO Elon Musk’s strong comments on the company’s outlook for an increased annual production and delivery rate in 2025, it was hard to be bearish.

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Granted, Tesla still has to come through on its lofty plans for the next year. But right now and for today, the focus is margins, and Wall Street is very happy with what they’ve seen.

Here’s what some analysts are saying.

Dan Ives of Wedbush:

“The major overhang on the Tesla story over the past year has been Gross Margins (Auto ex credits) under major pressure as a price war in China and softer EV demand globally has seen this metric go from the low 20% level to sub 15% in the June quarter. Last night, we saw this all-important metric spike back to 17.1%, handily beating the Street’s estimate at 15.1%, and now appearing to be on a trajectory back into the 20% level in 2H2025. “

Tom Narayan of RBC Capital:

“There is growth, and if they can do it with the margin strength that they have, now folks can stop thinking about the automotive piece and margins, and start looking at what really should drive Tesla stock, which is non-automotive things — Energy storage, autonomy, potentially Optimus.”

George Gianarikas of Canaccord Genuity:

“They had an incredible quarter from a margin perspective, much better than anyone thought because the costs of production came down to levels they’ve never before seen.”

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Thomas Monteiro, Senior Analyst, Investing.com:

“It’s great to see Tesla getting down to business when it really matters. Although macro factors such as improving demand in China and a resilient U.S. consumer undoubtedly contributed to the positive report, they do not tell the whole story here; in fact, the improving numbers across the board signal the company may have finally found a nice sweet spot for the pricing vs. production costs equation, which has been the main issue for stock performance since last year. Against this backdrop, the market got the message it needed to hear: Tesla’s margins are improving right when they needed to – that is, ahead of a better interest environment globally. This means the company may have more firepower to get the innovation it desperately needs both on the production and product sides faster and better than the competition.”

Tesla shares were up over 20 percent at the time of publication.

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Please email me with questions and comments at joey@teslarati.com. I’d love to chat! You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.

Joey has been a journalist covering electric mobility at TESLARATI since August 2019. In his spare time, Joey is playing golf, watching MMA, or cheering on any of his favorite sports teams, including the Baltimore Ravens and Orioles, Miami Heat, Washington Capitals, and Penn State Nittany Lions. You can get in touch with joey at joey@teslarati.com. He is also on X @KlenderJoey. If you're looking for great Tesla accessories, check out shop.teslarati.com

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Elon Musk

Elon Musk handed Grok something no other AI company can get their hands on

Elon Musk says SpaceX will feed engineering data into Grok’s next model, avoiding restricted material.

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Artistic concept rendering of SpaceX data being incorporated into a Grok AI model

Elon Musk said Tuesday that SpaceX will feed its internal engineering data into the next major training run for Grok, the AI model now folded into SpaceX following February’s merger. In a post on X, Musk wrote that SpaceX’s “massive corpus of world-class engineering data,” excluding anything restricted under U.S. arms export law, will be added during supplemental training of what he called the “2T run,” a reference to a roughly two trillion parameter model that would nearly double the parameters behind the latest Grok 4.5 that’s rolling out.

The excluded material that Musk is referring to would fall under the International Traffic in Arms Regulations (ITAR), which restricts export of technical data tied to defense and space hardware. That likely rules out propulsion specifics for Merlin and Raptor engines along with guidance and control details for SpaceX’s launch vehicles, but leaves manufacturing knowledge, materials science, and Starlink hardware design on the table.

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The announcement extends a pattern that has been building since SpaceX’s Nasdaq debut in June, when the company went public with Grok and xAI’s Colossus supercomputer folded into the pitch to investors.

Days after that listing, SpaceX closed its $60 billion all stock acquisition of coding startup Cursor, giving xAI both enterprise software distribution and a stream of real world developer data to train on. Grok 4.5 launched July 8 running partly on that Cursor training data, with Musk describing it as roughly comparable to Anthropic’s Opus 4.7 but faster and cheaper to run.

Feeding SpaceX’s own engineering data into the next AI model follows the same logic Musk has applied across xAI’s sister companies. Tesla supplies real world driving data and manufacturing expertise, X supplies conversational data, and now SpaceX supplies aerospace engineering data built up since 2002.

Musk did not give a release date for the upcoming AI model, referred to elsewhere as Grok 4.6. He has said the two trillion parameter run is in its final training phase and expected to wrap this week.

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Elon Musk

Elon Musk sends first warning to SpaceX short sellers

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Credit: Grok

In a pointed message on X, Elon Musk warned that firms maintaining significant short positions in SpaceX over time face “very low” survival probability.

The statement comes amid post-IPO volatility for the rocket company, now trading under the ticker $SPCX.

Five weeks after what was described as the largest IPO in history, the stock had fallen roughly 30% from its peak above $2.6 trillion, briefly surpassing Microsoft and Amazon in market value. Short sellers celebrated gains of about $8.7 billion, but Musk’s reply underscores his long-term conviction.

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The warning directly echoes a detailed bullish analysis arguing that Starship’s cost reductions could unlock a multi-trillion-dollar space economy. Projects ranging from solar power beamed from orbit and asteroid mining to orbital data centers and Mars terraforming were projected to create over $100 trillion in new market capitalization.

In this vision, SpaceX acts as the essential infrastructure provider, akin to AWS for cloud computing, capturing monopoly-like revenues from launches, crew transport, and data traffic across a rapidly expanding frontier.

This is far from the first time Musk has targeted short sellers. With Tesla, he has repeatedly framed persistent bears as destined for major losses. In July 2024, Musk declared that once Tesla achieves full autonomy and volume production of Optimus robots, “anyone still holding a short position will be obliterated. Even Gates,” referencing Microsoft co-founder Bill Gates’ reported short bets.

Elon Musk reveals what Tesla stock surge could do to Bill Gates

Earlier, in 2018, he taunted shorts that they had “about three weeks before their short position explodes,” a remark followed by sharp stock gains. Musk has also called short selling “value destroying” and once suggested it “should be illegal,” viewing it as betting against innovation and progress.

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Critics often dismiss Musk’s optimism as hype, especially when near-term metrics like quarterly deliveries or stock fluctuations disappoint.

Yet his pattern remains consistent: framing short positions against his companies as fundamentally misjudging exponential technological leaps. For SpaceX shorts, the message is clear: betting against multi-planetary ambitions and the infrastructure monopoly they enable carries existential risk for the firms involved.

As Musk and supporters see it, the space economy’s upside dwarfs Earth-bound valuation models, making today’s dips temporary in a decades-long ascent.

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Elon Musk

SpaceX Starship Flight 13 aborted at Zero and Musk just told us what broke

Four Raptor engines failed to ignite at T-zero, forcing SpaceX to scrub Starship Flight 13 Thursday.

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SpaceX scrubbed the Starship Flight 13 launch attempt Thursday evening at the last possible moment, after four of the Super Heavy booster’s 33 Raptor 3 engines failed to ignite during the startup sequence. The 90-minute window had opened at 6:45 p.m. EDT from Starbase in Boca Chica, Texas, and the countdown had proceeded without issue all day, with more than 11.5 million pounds of liquid methane and liquid oxygen being fully loaded into the rocket before the automated abort triggered. SpaceX’s launch directors posted on X, “Standing down from today’s flight test attempt,” and shut down the livestream shortly after.

Musk confirmed the root cause within hours. “Some of the engines didn’t start, triggering an automatic launch abort,” he wrote on X. “To be confident of a good flight, 2 Raptors will be removed and replaced. Most probable launch timing is early next week.” SpaceX engineers began draining propellant tanks immediately and Booster 20 was rolled back to its hangar for inspection.

SpaceX comes with a slew of changes for Starship Flight 13

 

The timing adds a layer of significance that did not exist during any of the previous 12 Starship flights. This is the first time SpaceX has attempted to launch Starship since the company made its stock market debut in June, listing under ticker SPCX at $135 per share. Public investors are now watching every Starship outcome in real time, and a last-second abort carries more visibility than it would have six months ago.

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Flight 13 was designed to be one of the most consequential tests in the program’s history. It was set to carry 20 Starlink V3 satellites, the first operational payload Starship has ever attempted to deploy. Six of those satellites carried external cameras to photograph Starship’s heat shield from the outside during flight, which would act as a self-inspection approach SpaceX has never attempted before. The mission also needed to complete a Raptor engine relight in space, a step SpaceX skipped on Flight 12 in May after losing an engine during ascent. That Flight 12 booster also flipped 90 degrees off course during its boostback burn when five engines failed to reignite.

SpaceX has not announced an official next launch date. Musk’s “early next week” window points to July 21 or 22 at the earliest, pending the engine swap and a return to the pad.

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