Investors rushed to embrace a leveraged exchange-traded fund (ETF) with a bullish outlook on Tesla (TSLA.O) as the electric vehicle giant’s stock stumbled in the wake of disappointing earnings results.
The Direxion Daily TSLA Bull 1.5X Shares ETF (TSLL.O), the largest single-stock ETF designed to capitalize on Tesla’s stock performance, recorded substantial net daily inflows of $24.9 million, according to Lipper data.
These inflows occurred as the $833 million fund, aiming to mirror 150% of Tesla’s daily stock price movements, experienced a 14% drop on Thursday.
Tesla’s shares also declined by 9.3%, hitting a two-month low, after CEO Elon Musk expressed concerns about high interest rates potentially impacting electric vehicle demand. The fund’s shares continued to dip by 4% on Friday.
Todd Sohn, an ETF and technical strategist at Strategas Securities, remarked, “Tesla has its fair share of bulls – and bears – so guessing the bulls are attempting to view this earnings release as a speed bump and using any weakness here to add exposure to positions.”
The leveraged Direxion fund has enjoyed net inflows of $501 million this year, doubling in price year-to-date. Tesla’s shares have surged by 72.3% throughout the year.
Furthermore, Tesla stood out as the most sought-after stock among retail traders on Thursday, with net purchases totaling $159.5 million, based on data from Vanda Research.
Conversely, two ETFs that take a bearish stance on Tesla, namely the $58 million Direxion Daily TSLA Bear 1X Shares ETF (TSLS.O) and the $109.6 million AXS TSLA Bear Daily ETF (TSLQ.O), witnessed net outflows exceeding $1 million each.
These funds both advanced more than 9% on Thursday and continued to rise by 2.4% each on Friday.
Adding to the mix, Rex Shares and Tuttle Capital Management introduced a series of hyper-leveraged single-stock exposure funds on Thursday, which includes the T-REX 2X Long Tesla Daily Target ETF (TSLT.O) and the T-REX 2X Inverse Tesla Daily Target ETF (TSLZ.O).
Investors appear to be navigating Tesla’s volatility with a blend of bullish and bearish positions, reflecting the polarized sentiments surrounding the company’s future performance.