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How Tesla Helped the Market Claw Higher Friday

By Dan Caplinger – Sep 24, 2021 at 6:25PM

Key Points

  • Markets bounced back after a rough start to the trading session Friday.
  • Tesla did well, reaching its highest levels in more than six months.
  • Investors are optimistic about the electric automaker despite some recent challenges.

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Most major benchmark indexes recovered from their early declines by the time the session closed.

Resilience has been a key feature of the stock market over the past 18 months, and Friday provided another small but meaningful example of that. After the benchmark indexes started the day with decent-sized declines, stocks inched higher during the session, eventually producing modest gains for the Dow Jones Industrial Average (^DJI -0.56%) and S&P 500 (^GSPC -0.09%) while minimizing the loss for the Nasdaq Composite (^IXIC).

Index

Percentage Change

Point Change

Dow

0.10%

33

S&P 500

0.15%

7

Nasdaq

(0.03%)

(5)

Data source: Yahoo! Finance.

One stock that has played a huge role in the bull market since early 2020 is Tesla (TSLA). The electric vehicle pioneer has gone through plenty of ups and downs, but it has rewarded its long-term shareholders with massive returns. On Friday, Tesla's stock picked up another 3%, lifting it to its highest level since February and bringing it to within spitting distance of its all-time record price. Below, we'll look more closely at Tesla and what pushed its stock higher Friday.

Hitting the gas

Tesla CEO Elon Musk was present at the Italian Tech Week conference in Torino, and he answered questions from reporters regarding the current state of the automotive industry and Tesla's role in it. There have been plenty of concerns about the semiconductor chip shortage and its particularly large impact on automobile production, and Musk's questioners sought guidance on Tesla's experience and outlook.

Four Tesla vehicles on a dirt parking lot in a desert setting.

Image source: Tesla.

Musk noted that -- as is typical in the cyclical semiconductor industry -- amid the current shortage, there are a large number of new fabrication plants under construction or in the works. As a result, he believes that the chip shortage should be a short-term issue. Once new plants are up and running, production should be more than sufficient to meet demand. In Musk's view, that should happen by next year.

Is full self-driving capability coming?

Tesla watchers are also eagerly awaiting the release of the latest beta version of the full self-driving (FSD) software featured in the company's vehicles. At the beginning of the month, Musk had projected that  the Beta 10 version of the FSD software would go public on Sept. 10, with the 10.1 update coming two weeks later. The Tesla CEO was optimistic that the 10.1 version would give the general public an opt-in request button.

The FSD system has been controversial lately. Federal regulators at the National Transportation Safety Board and a host of state-level agencies have expressed various levels of skepticism about FSD's capabilities.

Yet success with FSD is crucial for Tesla. The car company has been offering advance subscriptions to the system to buyers while it goes through development, currently collecting five-figure fees. Musk has said that as the self-driving system evolves, Tesla will continually add to its vehicles' price tags to reflect the greater number and sophistication of its features. The company's aspiration is fully autonomous driving, but even Tesla admits that FSD doesn't come close to full level 5 autonomy, and says the system requires active supervision from human drivers.

A bellwether of the bull

Tesla has inspired investors around the world, and its returns for long-term shareholders have been stellar. It'll need to keep wowing drivers and investors in order to generate further gains, but many shareholders have a huge amount of confidence in Musk and his ability to keep pushing the company forward.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

Stocks Mentioned

Tesla Stock Quote
Tesla
TSLA
$194.70 (%)
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$34,395.01 (-0.56%) $-194.76
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,076.57 (-0.09%) $-3.54
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$11,468.00 (%)

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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