Tesla ETFs Whipsaw as Stock Volatility Intensifies
- Tesla ETFs surged Wednesday then plunged Thursday.
- TSLT, TSLR and TSLL jumped 45% before falling nearly 19% in just 24 hours.
- Trade tensions and tariff policy shifts are driving extreme market fluctuations.
Tesla Inc. (TSLA)-focused ETFs whipsawed this week, highlighting the magnified risks these specialized funds present to investors during periods of market turbulence.
Leveraged Tesla funds bore the brunt of this volatility, with the T-REX 2X Long Tesla Daily Target ETF (TSLT), the GraniteShares 2x Long TSLA Daily ETF (TSLR) and the Direxion Daily TSLA Bull 2X Shares (TSLL) all surging approximately 45% Wednesday before surrendering roughly 19% during Thursday's session.
These specialized Tesla ETFs highlight how concentrated bets can produce stomach-churning results when market sentiment shifts rapidly, underscoring the danger of a single-stock focus during periods of policy uncertainty and trade tensions.
The BattleShares TSLA vs F ETF (ELON), which takes leveraged long positions in Tesla and short positions in Ford Motor Co. (F), exemplified this instability with a 35.8% Wednesday gain followed by a 15.7% Thursday loss.
Market Tension Drives Volatile Tesla ETFs
The extreme price movements are linked to President Donald Trump's Wednesday announcement of a 90-day tariff pause for most countries and a simultaneous increase of tariffs on Chinese imports to 125%, based on White House policy statements.
The announcement triggered an initial broad market rally, with the S&P 500 surging 9.5% and the Nasdaq-100 rising 12%, though these gains moderated as investors reassessed long-term implications.
For Tesla specifically, the tariff pause provided temporary relief from trade tensions, but enthusiasm waned when investors realized the pause excluded existing 25% duties on automobile imports and forthcoming tariffs on certain auto parts.
The Simplify Volt TSLA Revolution ETF (TESL), which employs a momentum-based algorithm that adjusts Tesla exposure between 80% and 150% based on technical indicators, posted a 23% gain Wednesday followed by a 10.5% decline Thursday, etf.com data show.
The Kurv Yield Premium Strategy Tesla TSLA ETF (TSLP), utilizing a synthetic covered call strategy for income generation while maintaining Tesla exposure, rose 18.2% Wednesday before falling 5.3% Thursday, according to market data.
ELON, launched Feb. 12 and currently with about $735,000 in assets under management, particularly benefited from Wednesday's divergence between Tesla and Ford. The ETF's strategy of maintaining a 180%-220% leveraged long position in Tesla while shorting Ford by 80%-120% magnified gains when Tesla surged and Ford struggled amid news of potential Canadian tariff impacts.
Source: ETF.com data
Traditional automakers like Ford saw their initial Wednesday gains quickly evaporate as analysts assessed Canada's retaliatory tariffs of up to 25% on U.S.-assembled vehicles. This divergence between Tesla's performance and Ford's vulnerability to cross-border tariffs temporarily supercharged ELON's returns before Thursday's broad market reassessment erased much of those gains.
The year-to-date performance of these Tesla-focused funds remains deeply negative despite the brief surge, with TSLP down 30.2%, TESL down 34.8% and leveraged funds showing even larger declines of around 64%, highlighting how risky these funds can be.
