A Tesla influencer with the Twitter account TeslaBoomerMama shared a response she received from Moody’s after she complained to the rating agency that Tesla’s credit rating should be improved.
Moody’s analyst Rene Lipsch explained that the reasons for Tesla’s junk rating are more qualitative than quantitative. The company’s reliance on a narrow product lineup was cited as one reason for its less optimistic outlook. He also recalled his suggestion that Tesla could be upgraded if it succeeds in expanding its global footprint, maintaining strong global competitiveness, and improving its product breadth.
Moody’s criteria include Tesla’s ability to maintain an EBITA margin of at least 7%, a consistent and prudent financial policy, and good liquidity.
Another Tesla influencer, Dave Lee, retweeted TeslaBoomerMama’s tweet and commented that Moody’s claim that Tesla is not investment grade is ridiculous.
Tesla CEO Elon Musk responded to Dave Lee’s tweet, saying “Moody’s doesn’t matter.”
Having a company with an investment-grade credit rating is a prerequisite for institutional investors to consider investing in it, and they may be reluctant to invest in companies rated junk. This explains theappleThe reason why Tesla’s institutional shareholder holdings are relatively small compared to other large technology companies.
Increased buying interest from institutional investors could boost shares, and Tesla’s recent stock split hasn’t given its stock a much-needed boost. Shares of the company fell 2.51% on Friday to close at $270.21.