Tesla Stock News and Forecast: TSLA set for boost as S&P rates it 'investment grade'

Tesla stock closed Thursday down just over 1%.
Twitter acquisition appears to still be weighing on TSLA stock.
Tesla just got upgraded to investment grade by S&P.

Ivan Brian FXStreet

Tesla (TSLA) managed to close lower on Thursday in line with the overall market. Investors have closed positions ahead of the big data release on Friday – nonfarm payrolls. That number should set the direction of markets for the month ahead. A strong number is not a positive in my opinion as it will lead bond yields to continue to push higher, thus pressuring equities.

Tesla stock news

Tesla received some positive news on Thursday as S&P Global Ratings increased its debt rating on Tesla to Investment Grade. I must admit that I did not realize Tesla was rated so low. It seems odd for one of the most valuable companies in the world to have been rated below investment grade. Perhaps this is indicative of the high valuation multiple Tesla has always traded on. S&P spoke to the strong margin and revenue growth going forward as the main reasons for the upgrade.

"In 2022 and 2023, we expect Tesla to sustain FOCF to sales of over 10%, compared with our prior upside trigger of 2%, backed by industry-leading EBITDA margins of roughly 20%, compared with our upside trigger of 18% and well above our 10% threshold for above average margins for automakers." More potential good news also came from Elon Musk on Thursday as he tweeted that the semi-truck was soon to be delivered to Pepsi (PEP).

Excited to announce start of production of Tesla Semi Truck with deliveries to @Pepsi on Dec 1st! pic.twitter.com/gq0l73iGRW
— Elon Musk (@elonmusk) October 6, 2022

Elon Musk said the truck has a 500-mile range and is fun to drive.

Tesla stock forecast

Tesla stock has broken down largely on speculation that Elon Musk will have to sell some of his holding to fund the Twitter deal, which now appears to be back on. This has seen Tesla fail to participate in the recent rally. Breaking support at $254.61 was key and that is now the pivot level in my opinion. Below and TSLA stock remains bearish with a target of the June lows at $207.

TSLA stock daily chart

Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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