Direxion Daily TSLA Bull 2X Shares (TSLL), a leveraged ETF designed to deliver twice the daily performance of Tesla stock, plummeted 17.02% in pre-market trading on Thursday. The sharp decline comes in response to Tesla's disappointing second-quarter earnings report and cautious forward guidance released after the market close on Wednesday.
Tesla reported second-quarter revenue of $22.5 billion, down 12% year-over-year and slightly below analyst expectations. Earnings per share came in at $0.40, missing forecasts 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, stating, "We probably could have a few rough quarters. I'm not saying we will, but we could."
The leveraged nature of TSLL amplified the impact of Tesla's earnings miss and cautious outlook. As a 2X leveraged ETF, TSLL is designed to deliver twice the daily performance of Tesla stock, making it particularly sensitive to any negative news or market sentiment. Despite Tesla's long-term optimism about its robotaxi plans and upcoming affordable vehicle model, 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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