An ETF filed Thursday would bet against one of the most loved stocks and companies and could create a battle with the world’s richest person.
What Happened: Direxion filed an ETF called Direxion Daily TSLA Bear 1X Shares. The ETF would bet against Tesla Inc TSLA on a daily basis and provide exposure to investors who believe the price of Tesla will fall or those looking for a hedge against a long TSLA position.
The filing was shared by Eric Balchunas, the Senior ETF Analyst at Bloomberg.
Direxion’s filing follows a filing for the Innovation Hedged Tesla ETF that's seeking to buy and sell call options in Tesla. The fund would invest 20% in calls on Tesla shares and put the rest of the capital into U.S. Treasury bills. The ETF would trade with the ticker TSLH.
AXS Investments filed in January for leveraged and inverse ETFs for each of nine individual stocks. The company is seeking to offer bullish and bearish ETFs on Boeing Inc BA, ConocoPhillips COP, Nike Inc NKE, NVIDIA Corp NVDA, Paypal Corp PYPL, Pfizer Inc PFE, Salesforce.com CRM, Wells Fargo WFC and Tesla.
Why It’s Important: None of the individual stock leveraged and inverse ETFs have hit the market yet and could face hurdles for getting approved.
The ETFs are likely considered due to demand from investors to bet heavily on certain stocks falling or gaining over a short time period.
Direxion already offers several 3x leveraged ETFs allowing investors to bet on the bullish or bearish side for indexes like the Dow Jones Industrial Average and S&P 500, international markets like the FTSE China index and on certain sectors like financials and semiconductors.
In late 2021, Tuttle Capital launched the inverse ETF to the popular Cathie Wood-led Ark Innovation ETF ARKK.
Tuttle Capital Short Innovation ETF SARK is up 21% year-to-date compared to a 23% drop in ARKK shares year-to-date. Tesla is the largest holding in ARKK at 8.7% of assets.
Tesla shares are down 12.6% in 2022. Shares have increased over 1,600% over the last five years and over 13,000% in the last 10 years.
Creating a short Tesla ETF could create an enemy in Tesla CEO Elon Musk, the world’s richest man. Musk often shares his opinions on Twitter and we await his reaction to the newly filed ETF.
TSLA Price Action: Shares trade around $876.35. Shares have traded between $539.49 and $1,243.49 over the last 52 weeks.
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