Tesla Crushes Earnings, But There Was One Problem

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Tesla (TSLA) - Get Report investors were nothing short of ecstatic after the electric vehicle maker posted positive earnings despite Wall Street's expectation of another quarterly loss. 

The stock rose 16.36% to $296.33 a share Thursday, and had gained as much as 18%. Earnings per share was an adjusted $1.82, against analysts expectation of 42 cents. 

And while investors and many analysts cited the dramatically lower costs as a reason for optimism on future profitability, there was one glaring issue. 

Revenue of $6.303 billion declined 8% year-over-year, 1% quarter-over-quarter and missed estimates of $6.425 billion. 

For context, "Tesla really hit on all cylinders," said TheStreet's Tech Editor Nelson Wang. "Not only did they report a surprising profit [when]  a loss was expected -- they also said the production of their Model Y was ready ahead of schedule, which are words you never hear with respect to Tesla. They also said they're on track to deliver 360,000 vehicles this year...Contrary to all of their past experience, it was a really solid quarter." 

But there's a 'but.' 

"Demand and whether they can sustain these earnings going forward continues to be a concern among investors, particularly amidst a draw-down in federal electric vehicle tax credits that we're seeing in the United States and increasing competition everywhere in the space," said TheStreet's Tech reporter Annie Gaus. "Whether they can sustain the demand we've seen so far this year continues to be a question for investors." 

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