Tesla and Coinbase Just Gave Shareholders Something to Smile About

Investors were in a good mood on Tuesday, and Wall Street had a nice rally as a result. The Nasdaq Composite (^IXIC) led the way higher, but gains for the Dow Jones Industrial Average (^DJI 0.98%) and S&P 500 (^GSPC 1.30%) were also quite respectable. Market participants seemed to feel more comfortable about the prospects for financial stocks, and that helped to feed optimism more broadly across the stock market.


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Data source: Yahoo! Finance.

Two of the best performers in the stock market were among investors’ favorite stocks to follow in 2022. Tesla (TSLA 7.82%) and Coinbase Global (COIN 11.78%) have seen a lot of volatility in their share prices for quite a while now, but on Tuesday, shareholders were quite pleased with their latest news. Here, you’ll learn more about what happened with Tesla and Coinbase and whether their stocks can stay on the rise in the months and years to come.

Tesla reaches another milestone

Shares of Tesla jumped 8% on Tuesday. The electric-vehicle pioneer has achieved a lot of things in its storied history, and it added another achievement to its list with significant financial implications.

Bond rating agency Moody’s boosted its rating on Tesla debt. The new rating is Baa3, which takes Tesla out of junk bond status and lifts its debt up to investment grade. The previous rating of Ba1 was the highest rating for junk debt, but the move dramatically improves the perception of Tesla as a high-quality issuer with solid prospects to be able to repay outstanding debt in the future.

Moody’s was upbeat about Tesla’s prospects. In the bond rating agency’s view, Tesla has the potential not just to build on its position as a top EV manufacturer but also to spread out its footprint globally and maintain its relatively high profit margins. Moody’s also expects vehicle production and delivery figures to remain robust, although calls for 1.8 million EV deliveries in 2023 would represent slower growth than the 50% long-term target that Tesla itself has sought to achieve.

Moody’s wasn’t the first to make the switch, as fellow rating agency S&P has seen Tesla debt as being investment grade for nearly half a year now. Nevertheless, investors are always more comfortable when there’s unanimity on bond ratings, and that could help Tesla get more access to capital in efforts to expand even faster.

Coinbase rides the crypto spring

Elsewhere, Coinbase Global shares were higher by 12%. The cryptocurrency exchange leader has benefited from surging prices of Bitcoin (BTC 1.18%) and other digital assets recently.

Bitcoin has climbed above $28,000, up more than $12,000 from its lowest levels just four months ago. Some investors have noted that interest has climbed in the wake of recent bank failures, as one of Bitcoin’s use cases is to act as a hedge against instability in more mainstream financial systems.

For Coinbase, a surge in crypto prices  could help reawaken trading activity. The so-called crypto winter was harsh for Coinbase, leading to dramatic declines in trading volumes. With Coinbase relying on trading for much of its revenue, poor conditions sent the stock plunging in 2022.

If crypto stays strong even as financial markets remain on edge, then it could help Coinbase recover further. The stock still has a long way to go before it comes close to approaching its own all-time highs.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, and Tesla. The Motley Fool has a disclosure policy.