TLDR
- Tesla stock declined 2.6% to $398.38 following Arizona’s approval of its Transportation Network Company permit on November 17
- Third quarter 2025 delivered record $28.1 billion in revenue with 497,000 vehicle deliveries but profit margins collapsed to 6%
- Net income dropped 37% year over year to $1.4 billion as AI spending and vehicle pricing discounts weighed on results
- Phoenix regulatory approval allows paid ride-hailing with human safety drivers but prohibits fully autonomous commercial operations
- Stock valuation sits at 179 forward P/E with chart support holding at $380-390 and resistance near $430-450
Tesla received regulatory clearance from Arizona transportation officials on November 17 to launch paid robotaxi service. The stock fell 2.6% to $398.38 anyway.
The Transportation Network Company permit arrived four days after Tesla submitted its application. Arizona becomes the company’s second key robotaxi deployment zone alongside Texas.
The approval comes with restrictions. Tesla cannot operate fully driverless vehicles commercially. Human safety operators must remain in all cars under existing state rules.
Phoenix represents a crucial autonomous vehicle testing market. Waymo already runs a 315-square-mile driverless network across the metro area. Tesla’s entry creates fresh competition in territory known for supporting self-driving technology.
Tesla completed its autonomous vehicle self-certification in September after starting regulatory discussions in June. The company can now begin building its ride-hailing infrastructure despite the driverless limitation.
Earnings Tell a Troubling Story
Q3 financial results reveal why investors stayed cautious. Revenue climbed 12% from last year to $28.1 billion. Vehicle deliveries reached a company record of 497,000 units, representing 7% annual growth.
Profit metrics moved in the opposite direction. Net income fell 37% to $1.4 billion. Operating income decreased 40%. Operating margins compressed from 11% to roughly 6% compared to the year-ago quarter.
Earnings per share declined for the fourth consecutive quarter. Aggressive vehicle discounting and ballooning AI development expenses crushed profitability across the business.
Some of the delivery strength came from buyers claiming the expiring $7,500 federal EV tax credit. That artificial boost may create a demand hole in the current quarter.
Heavy Spending Weighs on Results
Tesla keeps pouring capital into AI chips, data centers, and autonomous driving technology. These investments support the Full Self-Driving program but show up as costs instead of revenue today.
CEO Elon Musk stated on the earnings call that robotaxis should operate in eight to ten metro areas before 2026. Regulatory approvals will dictate the actual rollout speed.
The stock trades at about 15 times revenue after recent declines. Forward price-to-earnings multiples remain stretched at 179. The trailing P/E ratio hovers near 286.
Technical indicators show support forming between $380-390 on daily charts. The 50-day moving average tracks around $355-360. Key resistance levels sit at $430-450 with the annual high at $488.54.
Shares currently trade 12% above the 50-day average and 20% above the 200-day line. The RSI indicator reads 62, below levels typically considered overbought.
Stifel raised its price objective to $508 from $483 while maintaining a Buy recommendation. Analysts highlighted autonomous driving progress as the primary catalyst for upside potential.
Arizona’s regulatory framework makes it ideal for robotaxi expansion. The state has consistently supported autonomous vehicle development through flexible rules and streamlined approval processes.
The Phoenix permit gives Tesla infrastructure to scale its ride-hailing network even with the safety driver requirement. Future driverless approval could unlock the full economic model, though timing remains uncertain given current restrictions.
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