Tesla’s stock remained resilient despite missing earnings expectations, ending Thursday up +2%. The company faces cost challenges and increased competition in both China and the domestic market, particularly from General Motors.

Despite a 12% increase in Q3 sales to $28.09 billion and record vehicle deliveries, Tesla’s earnings per share dropped to $0.50 from $0.72 a year ago. The company’s margins were impacted by price cuts, higher input costs, and lower regulatory tax credit revenue.

Tesla’s stretched valuation, with a high P/E ratio of 269X and forward P/S ratio of 15X, is causing concern among investors. This is significantly higher than industry averages, with EPS revisions needing to trend higher for a buy rating at current levels.

Tesla’s future outlook remains optimistic, emphasizing strong demand and operational momentum. However, margins may continue to be under pressure from price cuts and increased input costs. Zacks estimates a dip in total sales for this year but a rebound in fiscal 2026.

Read more at Nasdaq: Be Concerned About Tesla’s Q3 Earnings Miss?