Why Tesla Stock jumped on Thursday

What happened

Actions of the manufacturer of electric cars adze (NASDAQ: TSLA) rose sharply on Thursday. The stock ended the trading day up 5.3%, trading at almost $ 656.

The gain in the growth stock was probably caused by a combination of a general rise in the stock market and S&P GlobalS (NYSE: SPGI) moves to increase the credit rating on the debt of the car manufacturer.

Three vehicles outside the Tesla factory.

Image source: The Motley Fool.

So what

Before S&P Globalmove next week to include Tesla shares in S&P 500 For the first time, S&P Global changed its Tesla debt rating to BB, up from BB-. S&P Global noted that “the company’s increasing liquidity has substantially reduced its financial risk.”

This news follows Tesla’s recent capital increase. Earlier this month, Tesla entered into a joint venture agreement worth up to $ 5 billion. This would strengthen Tesla’s cash position by an impressive 34%.

Also, the help of Thursday’s actions was probably the big movement of the market. Highlighting optimism in the market, S&P 500 increased by 0.6% to a record level.

Now what

Tesla will be added to the S&P 500 before the market opens. While this may provide a short-term boost to equities, investors should not rely on it.

More importantly, Tesla meets its year-round guidance for 500,000 deliveries and continues to provide evidence that this is just the tip of the iceberg for its long-term growth story.