The Nasdaq Composite (NASDAQINDEX:^IXIC) set a new record high on Monday, and investors have been hopeful that the flood of earnings reports hitting the market would help the tech-heavy index to sustain its upward momentum. With many fast-growing companies listed on the exchange, Wall Street has largely gotten what it has wished for from the Nasdaq over the past year, as the index is up more than 60% during that time.

One of the best performers among top stocks on the Nasdaq has been Tesla (NASDAQ:TSLA). The electric vehicle specialist has dramatically accelerated its long-term share-price gains over the past year, posting returns of more than 400%. In that context, the slight drop of about 3% in Tesla’s stock in pre-market trading on Tuesday morning following its Monday night earnings report is largely insignificant. Yet given the role that Tesla has played in the bull market over the past year, it’s best for investors to know what’s driving at least mild disappointment among those following the Elon Musk-led automaker.

Four Tesla vehicles in different colors in a dirt clearing in a desert landscape.

Image source: Tesla.

Good news from Tesla

Tesla investors already knew some of the most important aspects of how the first quarter of 2021 went. The company releases vehicle production and delivery data just days after the end of the quarter, and so shareholders had already responded positively to news that Tesla had produced more than 180,000 Model 3 and Model S units and delivered almost 185,000 vehicles during the first three months of 2021.

The latest from Tesla fills in the financial blanks. Revenue was higher by 74% from year-ago levels in the first quarter, due largely to growth not just in vehicle deliveries but in other parts of Tesla’s business as well. The proportion of revenue coming from regulatory credits actually decreased during the quarter, as those proceeds rose just 46% year over year to $518 million.

Moreover, Tesla’s bottom line looked healthy despite rising operating expenses. Adjusted net income jumped to $1.05 billion, more than quadruple its profit during last year’s pandemic-affected period. Earnings per share came in at $0.93 on an adjusted basis.

Operationally, Tesla showed strength across its business segments. Lease counts for vehicles jumped 56%, and inventory levels are down to just eight days, reflecting huge demand for Tesla’s cars and SUVs. Volume of solar modules deployed rose to 92 megawatts from 35 megawatts this time last year, and energy storage device deployments were also higher by more than 70% year over year. Tesla continued to build out its network of infrastructure and physical assets, with 561 store and service locations, a mobile service fleet of 923, and nearly 2,700 supercharger stations with more than 24,500 connectors.

What’s next from Tesla?

To sustain its big stock-price gains, Tesla has to grow aggressively. It has plenty of plans to do so. Its current production capacity in California and Shanghai amounts to more than 1 million vehicles annually. Moreover, it has Model Y factories in construction in both Texas and Berlin, and plans for facilities for Cybertruck, Tesla Semi, Roadster, and other future models are currently in development.

Interestingly, Tesla has now been around long enough to have a robust used vehicle business, and the automaker specifically mentioned growth in volume and financial performance from that segment. That suggests Tesla will try to keep a rein on used vehicles rather than leaving the market to third-party dealers it can’t influence.

Tesla is proud that it has built a top-selling premium sedan amid widespread skepticism that it would ever be anything more than a niche player. With plans to keep boosting production at a rate of 50% per year well into the future, Tesla still has a long growth runway ahead of it. How much of that is already reflected in the stock price remains to be seen, and that’s why downticks like investors are seeing on Tuesday morning aren’t unexpected. Nevertheless, shareholders can count on Tesla being center stage in the EV revolution for years to come.

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.