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. Investing in the Funds is not equivalent to investing directly in TSLA.
After an explosive fourth quarter which saw a rally to new all-time highs, shares of Tesla, Inc. have been faced with nothing but woes since the start of 2025. But after giving back all its post-election gains, are bulls finally due for some reprieve? Or will bears use this time to catch their breath before sending shares even lower?
Reverse Back to the Basics: Innovation
Tesla’s traditional business model is a bastion of innovation, extending beyond just electric vehicles (EV). Over the year, it’s evolved into a dynamic empire of technology and energy solutions, from its core EV lineup (Model 3, Model Y, Cybertruck) to energy storage (Powerwall, Megapack), solar power, and ambitious ventures like autonomous driving and AI. This broad vision has positioned Tesla as a leader in disruption and long-term growth potential.
The company’s ability to scale production, paired with its growing energy division, generates significant cash flow. Tesla’s wholly-owned Gigafactories deliver economies of scale, while its vertical integration—from battery production to software—provides a competitive edge.
In their last earnings report, TSLA surpassed analyst estimates, posting earnings-per-share (EPS)* of $0.73, notably exceeding analysts’ expectations of $0.63. But the market’s bigger concern now seems to be on the vehicle sales front. During Fed Chair Powell’s latest press conference, there was a generally dovish tone. If rates come down again, it could spur consumers to purchase vehicles. Traders that think this is a catalyst for further upside may find a position with Direxion’s Daily TSLA Bull 2X Shares (Ticker: TSLL), which seeks daily investment results, before fees and expenses, of 200% of the performance of Tesla, Inc. common stock (Ticker: TSLA).
Below is a daily chart of TSLA as of March 20, 2025.
Source: TradingView.com
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.
Problems Outside the Office
Despite its strong foundation, Tesla faces headwinds that could challenge its meteoric rise. The company’s lofty valuation—trading at a premium compared to traditional automakers—leaves little room for error, and Musk’s cautious outlook on near-term demand has sparked some investor unease.
Additionally, Tesla’s reliance on EV sales and government incentives exposes it to economic and policy shifts. Ironically, budget cuts from initiatives like DOGE (Department of Government Efficiency) could reduce subsidies or infrastructure spending, indirectly pressuring Tesla’s growth plans. Plus, rising competition in the EV space—from legacy automakers and Chinese rivals like BYD—adds further strain, with supply chain issues and raw material costs lingering as concerns.
Not to mention, Musk has entered a more political role in his public life - political boycotts, shareholder concern about his focus on the company - which seems to be impacting the stock in the near-term. This makes Tesla’s next earnings report on April 29 all the more important in determining whether the stock’s current downtrend holds. If the economy continues to soften, as recent employment data hints, TSLA’s decline could accelerate.
In this scenario, Direxion’s Daily TSLA Bear 1X Shares (Ticker: TSLS), which seeks daily investment results, before fees and expenses, of 100% of the inverse performance of common shares of Tesla, Inc. (Ticker: TSLA) could see a solid rally.
*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.
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 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 TSLA and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to TSLA is impacted by TSLA’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to TSLA at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to TSLA increases on days when 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 TSLA and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to TSLA is impacted by TSLA’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to TSLA at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to TSLA increases on days when TSLA is volatile near the close of the trading day.
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. The trading price of TSLA has been highly volatile and could continue to be subject to wide fluctuations in response to various factors. 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. 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.
Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Concentration Risk, Market Risk, Non-Affiliation Risk, Security Volatility Risk and Cash Transaction Risk. Additionally, for the 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.