Why Tesla Motors Inc Stock Was Moving in Reverse Today

Tesla stock fell after the car-maker reported earnings last night. Here's what you need to know:

May 8, 2014 at 10:45AM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Tesla Motors Inc (NASDAQ:TSLA) were stalling out today, falling as much as 10% after reporting first-quarter earnings last night.

So what: It was by no means a bad quarter for the electric vehicle maker as it beat estimates on both top and bottom lines. Tesla posted an adjusted per-share profit of $0.12 against expectations of $0.10, and non-GAAP revenue grew 27% to $713 million, ahead of the consensus at $683.5 million. Vehicles deliveries in the quarter at 6,457 were in line with guidance at 6,400, and the company maintained its full-year delivery guidance of 35,000 cars. 

Now what: Tesla seemed to be a victim of its own success with today's report as the company only beat analyst estimates modestly as expectations may have run out of control. It also said free cash flow would run negative this year as it begins construction of its lithium-ion plant known as the "gigafactory." Wall Street has a tendency to punish companies for sacrificing short-term earnings for what seems like sound long-term planning, so I'd tend to overlook today's drop on that account. Still, Tesla shares remain dearly priced, and investors should be aware that one quarter of scaled-back results could cause the stock to plummet again. 

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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