Tesla Returns to Double-Digit Revenue Growth. Time to Buy the Stock?

Core Insights - Tesla has returned to double-digit revenue growth in Q3 2025, with total revenue reaching $28.1 billion, a 12% increase year over year, driven by record vehicle deliveries of approximately 497,100 units [2][3] - Despite revenue growth, profitability remains a concern, with GAAP gross margin at 18% and earnings per share declining significantly [4][5] - The company's valuation is high, trading at a price-to-sales multiple of nearly 17, raising questions about the sustainability of its growth and profitability [10][12] Revenue Growth - Tesla's automotive revenue increased by 6%, while non-automotive segments saw higher growth, particularly energy revenue which surged by 44% [3] - The expiration of a federal electric vehicle tax credit at the end of Q3 may have pulled forward demand, potentially impacting future sales [3] Profitability Challenges - GAAP earnings per share fell by 37% to $0.39, and non-GAAP earnings per share decreased by 31% to $0.50, indicating ongoing profitability issues [4] - Operating expenses rose by 50% as the company invested in autonomy and manufacturing, which may strain future profitability [4] Future Growth Prospects - Tesla's energy business is performing well, with record storage deployments and significant revenue growth, which could help offset automotive profit pressures [6] - Management anticipates that hardware profits will eventually be complemented by software and AI-related profits, although execution risks remain [5] Market Position and Valuation - Tesla's market capitalization stands at approximately $1.5 trillion, with a current stock price of $433.88, reflecting a high valuation relative to its profit growth [7][10] - The company is making progress on its Robotaxi pilot program, which could enhance future earnings if successful [11] Software and Fleet Monetization - The adoption rate of Tesla's full self-driving technology is currently low, with only 12% of the vehicle fleet being paid full self-driving customers, but this could increase over time [9] - The timing and economics of transitioning to fully autonomous driving and the ridesharing network remain uncertain, impacting investment decisions [12]