Updated from 8:30 a.m. to include thoughts from S&P Capital IQ analyst.

NEW YORK (TheStreet) - Fitbit (FIT - Get Report) crushed Wall Street's expectations, but that didn't stop investors from sending the wearables company's stock down more than 12% in after-hours trading.

For the quarter, Fitbit generated adjusted earnings of 21 cents per share on $400 million in revenue, growing 253% year over year. It had been expected to make 9 cents per share on $319 million in revenue, according to analysts.

Fitbit unit sales were another particularly impressive statistic in the report, with more than 4.5 million devices sold in the quarter. The average selling price per device was $88, according to William Blair analyst Ralph Schackar.

Shares were falling sharply in early trading, down 11.2% to $45.84.

"James Park acquitted himself well when I interviewed him telling an excellent story," said TheStreet's Jim Cramer, referencing his interview with Fitbit's CEO on CNBC. "It was one of the strongest quarters I have seen this year. To me, though , I reiterate that above 50 it got too expensive and you should wait for lower prices to buy. 

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The San Francisco-based company's earnings report shows just how it's capitalizing off the growing wearables industry, which is projected to ship more than 72 million units in 2015, according to IDC.

"Wearables needs to be thought of as 'location-based services on your wrist' rather than the misconception of an add-on accessory or a digital version of your old watch," said Warwick Business School professor Mark Skilton in a statement. "It is, in fact, a 'weigh scale', 'a to-do list', 'a shop assistant', 'a payment tool' and more that connects you to the location space you are living in or moving and travelling around it."

Among of the only negatives in the company's quarterly report were its gross margins, which dropped to 47% from 52% as a result of new product offerings that have slimmer margins than Fitbit's earlier products. Management also noted that foreign exchange rates impacted gross margins.

Analysts were overall pleased with Fitbit's first earnings. Here's what some of them had to say:

William Blair analyst Ralph Schackart (Market perform)

"Devices sold and average selling price ahead of expectations. Fitbit sold 4.5 million devices (up 159% year-over-year) in the quarter, above the StreetAccount consensus of 3.9 million. The average price per unit of $88 also beat the StreetAccount consensus ($82) and was driven by a mix shift toward the higher-priced Charge, Charge HR, and Surge, which collectively comprised 78% of total revenue in the quarter."

SunTrust analyst Robert Peck (Buy, $52 PT)

"In the near term, given FIT's dominant market share in the U.S. and supply barely keeping up with demand, we believe 2015 outlook could be conservative and constrained by production capacity. Looking ahead, we think FIT will differente via R&D and S&M spend, and likely continue to deliver above market-average growth."

Leerink analyst Steven Wardell (Outperform, $79 PT)

"Gross margin for the quarter was 47%, below Street expectation of 48%. This was driven by a heavy mix of newer products such as the Surge and Charge, which have lower margins early in their manufacturing learning curve. While a lower gross margin adversely affects earnings, we believe that at this stage of the company's life investors should focus primarily on topline growth instead of earnings. No updates on active users and users with at least one connection on the Fitbit social network."

S&P Capital IQ analyst Angelo Zino (Hold, $50 PT)

"We keep our 12-month target price at $50, on peer-premium P/E to reflect FIT's fast growing addressable market. We keep our '15 operating EPS estimate at $0.71, '16's at $0.90 and '17's at $1.05. FIT posts Q2 operating EPS of $0.21, beating the $0.11 Capital IQ consensus. Sales rose 19% from a seasonally strong Q1, better than expected, on 4.5M new devices sold. Gross margins narrowed, hurt by unfavorable currency and capacity expansion. We see FIT benefiting from greater adoption for wearables and international expansion. But, we think valuation fully reflects growth potential."