Direxion Daily TSLA Bull 2X Shares (TSLL), a leveraged ETF designed to deliver twice the daily performance of Tesla stock, plummeted 11.85% in Thursday's trading session. The sharp decline came in response to Tesla's disappointing second-quarter earnings report and cautious forward guidance.
Tesla reported second-quarter revenue of $22.5 billion, down 12% year-over-year and slightly below analyst expectations of $22.79 billion. Earnings per share came in at $0.40, missing forecasts of $0.43 and representing a 23% decline from the same period last year. The company's automotive revenue, which accounts for the majority of its business, fell 16% to $16.66 billion.
Adding to investor concerns, Tesla CEO Elon Musk warned of potential headwinds ahead. "We probably could have a few rough quarters. I'm not saying we will, but we could," Musk stated during the earnings call. He cited challenges such as the expiration of EV tax credits and potential impacts from changes in EV incentives as factors that could affect Tesla's performance in the near term.
The leveraged nature of TSLL amplified the impact of Tesla's earnings miss and cautious outlook. As Tesla shares declined in after-hours trading on Wednesday and continued to fall on Thursday, TSLL experienced an even steeper drop due to its 2x leverage.
Despite the negative short-term outlook, Tesla remained optimistic about its long-term prospects. The company reiterated its plans for production of a more affordable vehicle model in the second half of 2025 and expects to start volume production of its Semi model and autonomous Cybercab in 2026. However, investors seemed to focus on the near-term challenges, leading to the significant decline in both Tesla stock and the leveraged TSLL ETF.
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