Source: Tesla Motors press images.

Sixteen seconds.

That's how long Tesla Motors (TSLA -0.71%) CEO Elon Musk laughed with Morgan Stanley analyst Adam Jonas during the company's second-quarter earnings call on Wednesday. BMW's new electric vehicle, the i3, had the two in a fit of uncontrollable giggles.

Musk, also the company's co-founder and product architect, certainly had good reason to be in a spirited mood. The stock is up about 360% year to date, setting new all-time highs after the company reported better than expected results... again.

What's behind all the hype? Let's dive in.

Profitability
The highlight of the quarter was undoubtedly the company's surprising report of non-GAAP profitability. The company reported a non-GAAP profit of $0.20 per share in contrast to analysts' estimate for a $0.17 loss. Sure, that's non-GAAP -- some analysts and investors certainly have a problem with Tesla's non-GAAP earnings, especially in light of the quarter's $30 million loss by GAAP standards. But that's another story, and I've covered it here.

GAAP or non-GAAP, the company is headed straight toward significant positive operating cash flow.

Despite a reduction in zero-emission vehicle credits, or ZEVs, Tesla's gross profit margin rose to 22% from 17% last quarter.

Even more impressive, the company is well on track to meet its ambitious goal of 25% gross margin excluding ZEVs by the fourth quarter of this year.

On the back of cost improvements, economies of scale, and supply chain improvements, Tesla's non-GAAP automotive gross margin excluding ZEVs rose a whopping eight percentage points sequentially, even after a nine percentage point sequential gain last quarter.

This leaves Tesla's automotive business at a 13% gross margin -- certainly not 25%, but definitely closer.

With gross margin expanding, Tesla's future is becoming more certain. Management expects the company to be "non-GAAP profitable and generate positive cash flow from operations every quarter this year excluding any benefit from ZEV credits."

Positive cash flow, along with a $747 million cash balance, is great news for Tesla shareholders. With meaningful cash, Tesla can ramp up its spending -- and that's exactly what investors want from America's most exciting growth story.

Spending
Tesla may continue on as non-GAAP profitable from here, but don't count on the company to report large EPS numbers anytime in the near future. And for the value investors out there, don't expect any meaningful free cash flow. It's not happening. Tesla has plans to spend money -- lots of it.

Between a rapid expansion of the company's Supercharger network, accelerating R&D expenses, and a plan announced this quarter to dramatically accelerate service center openings to provide "a level of service that is as close to flawless as humanly possible," the company doesn't expect to generate any significant free cash flow.

If the company isn't going to be raking in any free cash flow, does that mean the stock's a sell? Definitely not. As Tesla builds out its infrastructure, the value proposition for Tesla's electric vehicles grows stronger.

For Tesla, infrastructure and demand go hand in hand.

Zooming way out
It's impossible to understand Tesla, or any fast-growing company for that matter, by analyzing it on a quarter-to-quarter basis. That's why, when the company reported earnings, I was on the lookout for some big-picture statements. Fortunately, I found some.

Management thinks annualized sales for Model S could exceed 40,000 vehicles per year by late 2014 -- a significant jump from the company's current road map to deliver 21,000 vehicles worldwide for 2013.


Tesla Fremont factory. Source: Tesla press images.

At a 10,000-foot view, management is still planning on an affordable electric car for the masses. Musk said during the earnings call that he sees "a fairly clear path" to a $35,000 vehicle with a 200-mile range and a production capacity of about 500,000 cars per year. Musk has previously said that this car is just a few years out.

Finally, the company's Model X is on schedule for a limited launch in late 2014 and a full rollout in 2015.


Model X. Source: Tesla Motors press images.

Purely speculative?
Big spending, no free cash flow, and a valuation based on ambitious aspirations three to four years out: Tesla Motors sounds like a purely speculative bet -- especially after its stock spiked yet again post-earnings. But I say it depends on your time frame.

Sure, in the short run, Tesla Motors may be one of the riskiest rides in the stock market. But for investors with an ultra-long-term view, Tesla may be worth a second look.

Investing in Tesla Motors isn't about next quarter's results. It's not even about next year's results. A bet on Tesla is a bet on a first-rate CEO and management's proven ability to deliver a car ranked second to none. It's a bet on disruption.


Model S. Source: Tesla Motors press images.

Sure, a bet like this is not for everyone. Tesla will inevitably face challenges as it works out supply chain kinks and competition intensifies. But for the ultra-long-term investor who is looking for a company that could be a disruptive force over the next decade, Tesla fits the mold.

Whatever opinion do you hold on the stock, Tesla Motors certainly reminded the world this quarter that it is not messing around.