By Bansari Mayur Kamdar
(Reuters) – 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.
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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)