What happened

Tesla (TSLA 0.64%) beat estimates with its second-quarter earnings report, and the stock soared yesterday. After closing nearly 10% higher Thursday, Tesla shares are extending those gains in Friday trading against the backdrop of a falling market. While the Nasdaq Composite was down 1.9% as of 1 p.m. ET, Tesla shares were 1.4% higher at that time. 

So what

Tesla earned $1.95 per share for the quarter from sales of $16.9 billion. While that was down from first-quarter revenue of $18.8 billion, it still represented a jump of 42% year over year. And both top- and bottom-line results beat analyst expectations of $1.81 per share and $16.5 billion, respectively. Investors already knew the second quarter was challenging, with COVID-19 delays at its Shanghai plant and supply chain issues hampering the ramp-up of its two new plants. But Tesla's original guidance of 50% annual production growth still remains doable, which boosted investor confidence after the stock was down more than 30% year to date heading into the report. 

Now what

While Tesla's operating margin of 14.6% dropped sequentially, it was still comfortably higher than the year-ago period. One of the challenges Tesla worked to overcome in the quarter was ongoing supply chain disruptions. In the conference call with investors, CEO Elon Musk remarked that "it's been kind of supply chain hell for several years." 

The company ended the quarter with $18.9 billion in cash, cash equivalents, and marketable securities. The cash position grew thanks to more than $600 million in free cash flow. That's the sign of a healthy business. And though some are noting a market share decrease as competitors accelerate new electric vehicle launches, the market is growing at such a fast rate that Tesla looks to still be on track to hit its production growth goal for 2022. That helps explain why investors jumped into the stock after the report yesterday and continued that buying today.