By Bansari Mayur Kamdar
Investors piled into a leveraged exchange traded fund that bet on upside in Tesla's shares as the company's stock price sank following a weaker-than-expected earnings report.
The Direxion Daily TSLA Bull 1.5X Shares ETF, the largest single-stock ETF for bullish bets on Tesla's shares, saw net daily inflows of $24.9 million on Thursday, according to Lipper data.
The inflows came as the $833 million fund - which seeks to track 150% of Tesla's daily stock price performance - fell 14% on Thursday, while Tesla's shares fell 9.3% to a two-month low the day after CEO Elon Musk warned that high interest rates could sap demand for electric vehicles.
The fund's shares were down 4% on Friday.
"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," said Todd Sohn, ETF and technical strategist at Strategas Securities.
The leveraged Direxion fund has seen net inflows of $501 million so far this year and has doubled in price year-to-date. Tesla's shares are up 72.3% this year. Tesla was also the most-bought stock among retail traders on Thursday, with net buys of $159.5 million, according to data from Vanda Research. On the other side, two ETFs bearish on Tesla, the $58 million Direxion Daily TSLA Bear 1X Shares ETF and the $109.6 million AXS TSLA Bear Daily ETF, saw net outflows of over $1 million each. Both funds climbed more than 9% on Thursday and were up 2.4% each on Friday.
Rex Shares and Tuttle Capital Management launched a suite of hyper-levered single-stock exposure funds on Thursday, including the T-REX 2X Long Tesla Daily Target ETF, the T-REX 2X Inverse Tesla Daily Target ETF.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Ira Iosebashvili and Leslie Adler)
