NewzNEW YORK (AP) — Tesla reported a decline in profit for the latest quarter as it prepares for a possible merger with Elon Musk’s other big business, SpaceX. The electric vehicle maker reported third-quarter net income of $787 million, or 22 cents per share, down 44% from the year-earlier period. Excluding certain items, though, earnings per share of 48 cents beat Wall Street analyst expectations by 3 cents.
Revenue was basically flat at $28 billion, falling slightly short of analysts’ forecast. In a SpaceX conference call Tuesday, Musk said a long-rumored merger with Tesla might be in the works. He said that special committees had been set up at each company to discuss a possible combination, while cautioning that many hurdles remain.
Tesla stock fell 2% in after-hours trading after climbing 3.6% during the regular trading session. A positive for the quarter was free cash flow, or cash available after subtracting investments needed to keep the business running. Tesla reported $1.5 billion, a surprise to analysts who had expected the company would be burning through cash, not generating it.
Profit margins also held up despite concerns that discounts to boost sales may have squeezed profitability in recent quarters. For the three months through September, Tesla reported that it made 18.1 cents for every dollar of car sales, up almost 3 cents from a year earlier. Tesla had previously reported selling nearly 490,000 vehicles last quarter, a rise from the prior three months.
The increase followed a brutal drop stretching more than a year amid backlash over Musk’s support for President Donald Trump and right-wing politicians in Europe. The company increased capital spending, a major concern for tech investors who’ve been questioning future payoffs from artificial intelligence and how the investments will be financed. Tesla’s capital spending doubled in the third quarter to $4.7 billion.
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