Stocks fell Thursday morning but mostly recovered by the end of the session. The Dow Jones Industrial Average (DJINDICES:^DJI) closed in the green and and the S&P 500 (SNPINDEX:^GSPC) lost a few points.

Today's stock market

Index Percentage Change Point Change
Dow 0.02% 5.17
S&P 500 (0.23%) (5.94)

Data source: Yahoo! Finance.

Retail stocks fell, giving up some gains from a strong April, with the SPDR S&P Retail ETF (NYSEMKT:XRT) losing 1.2%. The healthcare sector was also weak; the Health Care Select Sector SPDR ETF (NYSEMKT:XLV) dropped 0.9%.

As for individual stocks, Tesla (NASDAQ:TSLA) fell despite maintaining its outlook for the Model 3 production ramp, and Spotify Technology (NYSE:SPOT) reported its first quarter since going public.

Abstract design of stock graphs.

Image source: Getty Images.

Tesla beats expectations as Model 3 ramps

Tesla announced first-quarter results that beat expectations, but ongoing concerns about Model 3 production and capital needs, perhaps influenced by the unusual way CEO Elon Musk handled analyst questions during the conference call, resulted in the stock slumping 5.6% today. Revenue increased 26.4% to $3.41 billion, compared with expectations for $3.22 billion. Non-GAAP loss per share was $3.35, less than the loss of $3.58 analysts had forecast. 

Model 3 production is making steady progress, but didn't hit the goal of 2,500 units per week that Tesla was shooting for by the end of the quarter. Production reached 2,270 per week in April, and the company is standing by its projection to hit "approximately 5,000" Model 3 vehicles "per week in about two months."

Sequentially, automotive gross margin was up 81 basis points on a GAAP basis and 498 basis points on a non-GAAP basis. The cash balance stands at $2.7 billion, compared with $3.4 billion at the end of Q4, and Tesla expects to be cash flow positive in Q3 and Q4. The company also announced it will reduce capital expenditures in 2018 from over $3.4 billion to less than $3 billion.

Making news in the financial press today was Musk's abrupt dismissal of two questions in the conference call. He said at one point, "Boring bonehead questions are not cool," in response to a question about capital requirements, after having answered two others from the same analyst. 

Either investors thought CEO rudeness was a material event, or they feared evasiveness on capital needs signaled bad news ahead. Otherwise, the report held little in the way of surprise, except for the reduced capex expectations, which should have been seen as good news.

Spotify hits guidance in first quarter as a public company

Online music service Spotify missed analyst expectations in its first earnings report since going public, and shares fell 5.7%. Revenue grew 26% to $1.37 billion, compared with expectations of $1.40 billion. Loss per share came in at $1.21, while analysts had modeled for a $0.46-per-share loss.

Spotify's results were actually close to the company's prior guidance. Revenue was in the upper half of the guidance range, and gross margin of 24.9% was above the range of 23%-24%. The company finished the quarter with 170 million monthly active users (MAUs), comparing well with guidance of 168 million to 171 million, and growing 30% from the period last year. Premium subscribers grew 45% to 75 million, again falling above the midpoint of guidance.

Looking forward, Spotify maintained previous guidance for the full year, but gave a forecast for Q2 that disappointed some observers. Revenue is expected to be between $1.32 billion and $1.56 billion, short of the $1.57 billion analyst consensus figure, according to Reuters. MAUs are expected to grow 28% to 32% and premium subscribers 34% to 41%.

All told, it seemed to be a reasonably successful quarter for Spotify. In fact, the stock only pulled back to its level of last Friday, and is still well ahead of its price after the first day of trading.

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