Why did Tesla shares jump 5% this week?

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Tesla shares jump 8%

Tesla share price soared: Records best day since January 

Tesla share price jumped 8% on Tuesday, March 21 after renowned brokerage Moody’s upgraded the company’s bonds to an investment grade, while also taking support from a jump in vehicle sales in China.  

Tesla share price has gained about 60% this year, regaining all of the losses it made in 2022, primarily due to hopes of easing interest rates in the US and expectations of rising EV sales. 

Tesla share price: Why is it rallying?

  • Moody's Analytics has upgraded Tesla bonds to investment-grade status for the first time. 

The rating agency has raised Tesla's rating by one notch to "Baa3" due to the company's strong position in the electric vehicle market and its efforts to maintain low costs, which have increased its ability to repay its debts. 

The new rating signifies that Tesla's bonds are no longer classified as "junk" or purely speculative and indicates a positive outlook for the company's ability to meet its financial obligations.

Tesla bonds were ignored by credit rating agencies for many years, despite the fact that the company's stock price experienced a long-term increase and made it the world's eighth-largest company in terms of market capitalization.

  • Robust China Sales

Data from China Merchants Bank International, which monitors car insurance registrations, revealed that Tesla's retail sales in China amounted to 106,915 units from January 1 to March 19. 

This means Tesla sold on an average 1,371 cars per day. The figures are slightly higher than the average daily sales of 1,327 units in the fourth quarter of last year, during which Tesla achieved its best quarter so far, selling a total of 122,038 cars.

  • Lower interest rates hopes

Technology stocks had been battered in 2022 after the US central bank hiked interest rates multiple times. 

Turn to this year, technology stocks have been the best performing set of stocks in 2023 as investors expect the US central bank to take a pause from interest rate hikes or atleast make smaller hikes this year. 

Tesla share price: Analyst View

  • Brokerage Berenberg has a “hold” rating on the stock with a share price target of $210.
  • Brokerage Needham has a “hold” rating on the stock with a share price target of $196.
  • Guggenheim Securities has a “sell” rating on the stock with a share price target of $105. 

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.