Why Elon Musk Isn't Bothered About Tesla's Junk Credit Rating

Tesla, Inc.'s TSLA credit rating is below investment grade, which, in other words, is referred to as junk or non-investible.

A Twitter user shared a screenshot of the summary of ratings of large-cap companies by both Moody's and S&P. The former has a Ba1 rating for Tesla and the latter has BB+ rating, both of which denote junk ratings.

The credit rating reflects financial strength, as measured by cash flow from operations and certain other debt-related ratios.

The user going by the Twitter handle @MmeAlexandraS raised the issue to highlight the fact Tesla's credit rating has deterred some actively-managed funds from picking the stock up. She also noted that this could change soon if a SEC proposal in the pipeline is realized, which would remove references to or requirement of reliance on credit ratings from the agency's rule and substitute an appropriate standard for creditworthiness.

Related Link: Elon Musk Teases Next Tesla AI Day: 'Cool Updates' Coming In August

Meanwhile, Tesla CEO Elon Musk has a different take on the company's credit rating. He suggested that credit ratings mean nothing for the EV maker as it doesn't rely on debt.

Tesla doesn't need debt, so the rating doesn't impact us, but it is silly

— Elon Musk (@elonmusk) May 18, 2022

Price Action: In premarket trading Wednesday, Tesla shares were slipping 1.50% to $753.50, according to Benzinga Pro data.