What happened

Shares of electric-car and sustainable energy company Tesla (NASDAQ:TSLA) fell as much as 6.5% on Thursday following the company's first-quarter earnings report Wednesday afternoon. The stock is down 5.7% at the time of this writing.

So what

Though its first-quarter earnings report included record revenue, the company missed the mark when it came to earnings. Tesla posted an adjusted loss per share of $1.33 for its first quarter. While the loss per share was narrower than its adjusted loss of $1.46 per share in the year-ago quarter, it was a more significant loss than analysts anticipated. On average, analysts expected an adjusted loss per share of $0.83. 

Model S and Model X vehicles outside of Tesla's factory.

Image source: Author.

Tesla's disappointing adjusted loss was primarily attributable to higher research and development and selling, general, and administrative expenses.

In light of the stock's 55% rise in the past six months (including the impact of today's sell-off), any bad news was likely enough to help justify a sell-off, particularly when pairing the recent rise with an extraordinary valuation. Tesla trades at about six times sales, far higher than the average price-to-sales ratio of its automotive peers of 0.5. 

Now what

Tesla's profitability isn't likely to improve meaningfully in the near future. With its lower-priced, higher-volume Model 3 beginning production in July, the company will likely continue to prioritize sales growth and market share over profitability.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.