Electric vehicle company Tesla Inc TSLA has been one of the top performing stocks of the last five and 10 years. As the company faces increased competition in the electric vehicle space, investors have often bet against the automaker.
A handful of bearish ETFs for Tesla have popped up. Here’s a look at how one has performed.
What Happened: In July, the AXS TSLA Bear ETF TSLQ launched from AXS Investments. The ETF offered investors the opportunity to be bearish on Tesla and utilize an ETF instead of shorting the stock themselves.
The ETF was one of several single stock and inverse ETFs that have entered the market in 2022.
“We are thrilled to be the first firm to bring single-stock leveraged and inverse ETFs to U.S. investors,” AXS Investments CEO Greg Bassuk said at the time.
“ASX has once again opened new access for investors, namely to express their high-conviction on some of the most actively traded single stocks, regardless of whether their sentiment is bullish or bearish.”
Along with the Tesla Bear ETF, AXS launched single stock ETFs for NVIDIA Corp NVDA, PayPal Holdings PYPL, Nike Inc NKE and Pfizer Inc PFE.
AXS also previously filed to launch the AXS TSLA Bull Daily ETF, which was not part of its initial batch of single stock ETFs.
Along with AXS, other ETF companies have launched single stock and inverse ETFs to capitalize on investor demand to be particularly bullish or bearish on a specific stock or sector.
Direxion launched the Direxion Daily TSLA Bull 1.5X Shares TSLL and the Direxion Daily TSLA Bear 1X Shares TSLS in August.
Tesla shares are down over 50% year-to-date in 2022, turning potential short positions into winning trades. Here’s a look at how the first Tesla single stock bear fund has performed since launching.
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Investing $1,000 In TSLQ: The AXS Tesla Bear Daily ETF launched on July 14 and opened for trading at $50.48.
A $1,000 investment could have bought 19.81 shares of TSLQ. The $1,000 investment would be worth $1,090.14 today based on a price of $55.03 for the ETF at the time of writing.
The $1,000 investment would be up 9% since July 14. This may not sound like much, but it comes at a time when an investment in Tesla shares would have been down.
The S&P 500 Global ETF Trust SPY, which tracks the S&P 500, was up 6.7% in the same time period, showing that an investor would have had a better return betting against Tesla than investing in the overall market in the given time period.
Betting against Tesla in 2022 against a backdrop of challenging macro market conditions has been more of a winning idea. Betting against Tesla for the long run could be a riskier move, with the stock up 825% and 9,162% over the last five years and 10 years, respectively.
If Tesla can continue its growth in electric vehicles and winning share in other sectors, shares could recover going forward.
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Photo courtesy of Tesla.
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