Cybertrucks, Cloud Wars, & Prime Time Drama: TSLA & AMZN Earnings
Editor’s note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.
Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. An investor could lose the full principal value of his or her investment in a single day. Investing in the Funds is not equivalent to investing directly in AMZN or TSLA.
The upcoming earnings season includes a pivotal moment for a pair of giants in their respective fields: Tesla, Inc. (Ticker: TSLA) and Amazon.com, Inc. (Ticker: AMZN). Traders are closely watching these companies for updates that could shape market sentiment and trigger moves in these two widely owned stocks. Direxion’s Single Stock Daily Leveraged and Inverse ETFs provide tactical tools to capitalize on potential earnings-driven volatility*.
Tesla: Innovation Amidst Growing Competition
Tesla’s Q4 2024 earnings call will likely emphasize its ambitious plans to sustain growth while addressing intensifying competition from both legacy automakers and electric vehicle (EV) startups.
Below is a daily chart of TSLA as of January 13, 2025.
Source: StockCharts.com, January 13, 2025.
Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.
The performance data quoted represents past performance. Past performance does not guarantee future results.
TSLA Earnings Date: January 29, 2025 (expected), according to Tesla.
Key Themes:
- Cybertruck and Beyond: Updates on the latest quarterly Cybertruck sales, alongside developments in affordable SUVs, luxury sports cars, and the Robotaxi initiative, will be critical for gauging Tesla’s future revenue streams.
- Battery Business and Manufacturing Efficiency: With most Tesla batteries still sourced from China, updates on localization efforts, cost management, and automation in its Nevada Gigafactory expansion ($3.6 billion investment) will be closely scrutinized.
- Supercharging Network Expansion: Tesla’s $500 million investment to enhance its charging infrastructure across the U.S., EU, and China underscores its commitment to bolstering EV adoption.
Metrics to Watch: Vehicle delivery numbers, gross margins, and progress in reducing battery costs.
Trading TSLA Earnings: Traders anticipating strong results and positive guidance can leverage the Direxion Daily TSLA Bull 2X Shares (Ticker: TSLL), which seeks daily investment results, before fees and expenses, of 200% of the performance of Tesla, Inc. For those expecting weaker-than-expected results or growing competitive pressures, the Direxion Daily TSLA Bear 1X Shares (Ticker: TSLS) offers a bearish positioning opportunity by targeting daily investment results, before fees and expenses, of 100% of the inverse of Tesla, Inc.’s performance.
Amazon: Strengthening Across Verticals
Amazon’s Q4 2024 earnings will provide insights into its resilience amidst rising competition and macroeconomic challenges.
AMZN Earnings Date: February 6, 2025 (expected), according to Nasdaq.com.
Key Themes:
- E-Commerce and Prime: Updates on holiday-season performance, Prime subscription growth, and trends in fulfillment and delivery costs will shed light on Amazon’s core business health.
- AWS and Cloud Leadership: AWS, a significant profit driver, faces increasing competition from Microsoft Azure and Google Cloud. Investors will monitor AWS’s growth trajectory and profitability metrics.
- Advertising and Video Content: The advertising business and Prime Video’s content strategy will be under the microscope as Amazon seeks to diversify revenue streams.
- Grocery and Device Ecosystem: Progress in the grocery business and updates on hardware like Kindle devices could reveal Amazon’s approach to expanding its customer base.
- Regulatory Concerns: Antitrust scrutiny and labor-related challenges could weigh on sentiment and future strategies.
Metrics to Watch: AWS revenue growth, advertising income, and Prime membership trends.
Trading AMZN Earnings: Traders bullish on Amazon’s earnings can consider the Direxion Daily AMZN Bull 2X Shares (Ticker: AMZU), designed to deliver daily investment results, before fees and expenses, of 200% of Amazon.com, Inc.’s performance. Conversely, those expecting disappointing results or cautious guidance can use the Direxion Daily AMZN Bear 1X Shares (Ticker: AMZD), which targets daily investment results, before fees and expenses, of 100% of the inverse of Amazon.com, Inc.’s performance.
*Definitions and Index Descriptions
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
The Funds have derived all disclosures contained in this document regarding Amazon.com, Inc. from publicly available documents. In connection with the offering of each Fund’s securities, neither the Funds, the Trust, nor the Adviser or any of its respective affiliates has participated in the preparation of such documents. Neither the Funds, the Trust nor the Adviser or any of its respective affiliates makes any representation that such publicly available documents or any other publicly available information regarding Amazon.com, Inc. is accurate or complete. Furthermore, the Funds cannot give any assurance that all events occurring prior to the date hereof (including events that would affect the accuracy or completeness of the publicly available documents described above) that would affect the trading price of Amazon.com, Inc. have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of or failure to disclose material future events concerning Amazon.com, Inc. could affect the value of a Fund’s investments with respect to Amazon.com, Inc. and therefore the value of the Funds.
Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.
Leverage Risk – The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with AMZN and TSLA and may increase the volatility of the Bull Fund.
Daily Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with AMZN and TSLA and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to AMZN and TSLA is impacted by AMZN’s and TSLA's movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to AMZN and TSLA at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to AMZN and TSLA increases on days when AMZN and TSLA is volatile near the close of the trading day.
Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with AMZN and TSLA and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to AMZN and TSLA is impacted by AMZN’s and TSLA's movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to AMZN and TSLA at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to AMZN and TSLA increases on days when AMZN and TSLA is volatile near the close of the trading day.
Amazon.com, Inc. Investing Risk — Amazon.com, Inc. faces risks associated with intense competition across different industries, including physical, e-commerce omni channel retail, e-commerce services, web and infrastructure computing services, electronic devices, digital content, advertising, grocery, and transportation and logistics services; the expansion into new products, services, technologies and geographic regions; its international activities; the variability in the demand for its products and services; fraudulent and unlawful activities of sellers; intellectual property rights; successfully optimizing and operating its fulfilment network and data centers; data loss or other security breaches; maintaining and hiring necessary key management personnel; maintaining good supplier relationships; the success of acquisitions or joint ventures or other investments; its rapidly evolving and expanding business model; and legal, regulatory, tax liability and litigation issues.
Tesla Investing Risk — The trading price of TSLA has been highly volatile and could continue to be subject to wide fluctuations in response to various factors. Tesla, Inc. Investing Risk — Tesla, Inc. faces risks associated with future growth and success of consumers' demand for electric vehicles; increasing competition; variability in the market for electric vehicles; potential delays in developing and launching new products; mismatches between supply and demand for the products; charging networks may be difficult to establish; product liability claims; cyberattacks; financial costs; system security and data breeches; as well as the risks related to the fact that communications from Mr. Musk to the public may significantly impact the trading price of TSLA.
Automotive Companies Risk — The automotive industry can be highly cyclical, and companies in the industry may suffer periodic operating losses. Automotive companies can be significantly affected by labor relations, fluctuating component prices and supplier disruptions.
Consumer Discretionary Sector Risk — Companies in the consumer discretionary sector are tied closely to the performance of the overall domestic and international economy, including the functioning of the global supply chain, interest rates, competition and consumer confidence.
Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Industry Concentration Risk, Market Risk, Indirect Investment Risk, and Cash Transaction Risk. Additionally, for the Direxion Daily AMZN Bear 1X Shares and Direxion Daily TSLA Bear 1X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.
Distributor: ALPS Distributors, Inc.