Tesla’s Earnings Smashed Forecasts Again. Hello, S&P 500.

It’s hard to be more precise because earnings estimates on Tesla have been all over the place for the pandemic-affected second quarter. Estimates started the year out at a profit of $1.90 a share, dipped to a loss of about $1.40, before recovering to break even by the time earnings actually rolled around on Wednesday.

The adjusted earnings are nice for stockholders, but most investors will focus on the GAAP profit. With the second quarter in the books, Tesla has been profitable on a rolling 12-month basis and profitable in the most recent quarter. Both are key criteria for inclusion in the S&P 500 index.

Shares are up 4.1% in after hours trading. It’s a relatively small move for Tesla.

What happens next is anyone’s guess. Tesla stock actually closed 2.3% lower after the company reported strong first-quarter results. Investors have come to expect a lot from Tesla.

Tesla posted the solid results, in part, by generating solid profit margins in the automotive business. Automotive gross profit margins were about 25%, and 17% excluding credits Tesla earns as a zero-emission vehicle producer.

Gross profit margins were up about 6 percentage points year over year and flat compared with the first quarter of 2020. Bearish investors may focus on how margins were boosted by regulatory credits, but offsetting that is the fact that Tesla’s factory in Fremont, Calif., was shut down for part of the quarter as a result of the pandemic.

Free cash flow generated in the second quarter was $418 million, much better than analysts predicted.

Better than predicted is a common theme for Tesla these days. The Street didn’t know what to expect for the second-quarter numbers. Although the average among calls indicated that Tesla would more or less break even, the highest estimate was for a profit of $1.45 a share. The lowest estimate was a loss of $2.53 a share.

Wall Street rarely agrees on Tesla earnings, or Tesla stock. Analysts’ price targets for the shares range from roughly $300 to $2,300. The $2,000 gap, or bull-bear spread, is more than 100% of the current stock price and about three times as wide as the average spread for stocks in the Dow Jones Industrial Average.

The second-quarter results are more fodder for investors convinced electric cars are the future and that Tesla will maintain its competitive lead in the category.

On the company’s conference call Musk looked ahead to the next 12 to 18 months, pointing out the company, over that time frame, will open multiple new factories, launch the Cybertruck, semi-truck and roadster as well as continue the development of Tesla’s full self driving, or FSD, capabilities.

The next plant is slated for Austin, Texas. “If anyone is interested in working at Giga Texas ...please let us know,” said Musk on the earnings conference call.

Tesla shares were up about 6% week to date as of the close of trading on Wednesday. Year to date, the stock was up about 280%, crushing comparable returns of the Dow and S&P as well as Tesla’s automotive peers.

Write to Al Root at allen.root@dowjones.com