Shares of Tesla (TSLA 2.99%) soared following the company's earnings report on Wednesday afternoon. The stock jumped more than 10% at one point in after-hours trading -- and that was on top of a 4% gain during the trading day on Wednesday. The move put shares above $880, or up 270% over the past year and more than 100% in 2020 alone.

The growth stock is absolutely crushing the market.

But what was is it in Tesla's first-quarter update on Wednesday that gave the electric-car maker's stock yet another boost higher? Here's a look at three key reasons investors are optimistic following the electric-car maker's latest quarterly update.

Tesla's Model S, 3, X, and Y

Image source: Tesla.

1. Profitable for a third quarter in a row

Perhaps the main reason Tesla stock jumped was the company's better-than-expected first-quarter earnings. Its adjusted earnings per share was $1.24, crushing analysts' average forecast for a loss per share of $0.36. Furthermore, Tesla notably reported a small profit of $16 million (nine cents per share) on a generally accepted accounting principles (GAAP) basis.

"Q1 2020 was the first time in our history that we achieved a positive GAAP net income in the seasonally weak first quarter," management said in the company's first-quarter update.

This marked the third quarter in a row that Tesla was profitable on both a GAAP and non-GAAP basis.

Revenue for the quarter increased 32% year over year to $5.99 billion, fueled by record first-quarter production and vehicle deliveries.

2. Model Y's impressive start

One reason investors have been so bullish on Tesla stock over the last year is the company's accelerated pace of execution. In late 2019, the company brought online a factory in China, less than a year after breaking ground on it. Then in March of 2020, Tesla started delivering its new Model Y crossover six months ahead of the company's original timeline for the vehicle.

Now Tesla has yet another important bit on its improved pace of execution to report to shareholders: Model Y sales contributed a gross profit during the quarter, marking "the first time in our history that a new product has been profitable in its first quarter," Tesla said.

3. Improved profitability in Shanghai

Another encouraging sign of progress during the quarter was the company's improved gross margin. Tesla's automotive gross margin during the quarter was 25.5% -- the highest the company has seen in 18 months. While higher regulatory credit revenue gave this key metric a boost, another benefit driving sequential margin expansion was improved profitability at the company's new factory in Shanghai, Tesla said. Further, the company said it now expects to achieve a Model 3 production rate of 4,000 units per week at its Shanghai factory by mid-2020.

What about COVID-19?

Of course, Tesla acknowledged that COVID-19 has created challenges for the company. "It is difficult to predict how quickly vehicle manufacturing and its global supply chain will return to prior levels," management said. The company's factory in California is currently on pause as Tesla copes with economic restrictions as part of an effort to help slow the spread of the coronavirus.

Further, management said it is withdrawing guidance for positive net income and free cash flow over the near-term, highlighting a "wide range of potential outcomes" during this uncertain time. "We will again revisit our 2020 guidance in our Q2 update."

Reassuring investors, Tesla said it believes it has sufficient liquidity to continue significant investments in its product roadmap and long-term capacity expansion while also managing the near-term challenges from COVID-19.

Tesla ended the quarter with $8.1 billion of cash. But free cash flow was negative $895 million due to a combination of a sequential inventory growth due to the interruption operations because of the coronavirus and investments in Model Y production capacity.

If Tesla can't reopen its factory soon, the company's cash position could fall sharply.