ELON Doubles Down on Tesla's Edge Over Ford With 2x Leverage
Defiance's ELON fund arrives as Tesla struggles with a 10% monthly decline while Ford shows resilience in the competitive EV landscape.
Tesla's recent stock performance might give pause to investors eyeing Defiance ETFs' newest offering—a leveraged ETF betting on Tesla's (TSLA) dominance over Ford (F) in the electric vehicle market.
The Miami-based ETF provider launched its Battleshares TSLA vs. F ETF (ELON) Thursday, taking an aggressive stance on the EV industry's direction with a 200% leveraged long position in Tesla paired with a 100% short position in Ford.
The timing of ELON's debut coincides with a challenging period for Tesla investors, as the EV maker's stock has dropped 10.63% over the past month to $354.22, while Ford shares declined just 3.43% to $9.44. This disparity would have resulted in substantial losses for ELON holders, highlighting the fund's high-risk profile.
Tesla's recent headwinds include missed fourth-quarter earnings expectations, with revenue of $25.71 billion and its first annual decline in vehicle deliveries since unveiling the Model 3.
Meanwhile, Ford beat earnings forecasts with $0.39 per share and revenue of $48.2 billion, though its EV division lost $1.4 billion.
The Math Behind ELON's Performance
Had ELON existed during the past month, investors would have faced steep losses. The fund's double leverage on Tesla's 10.63% decline translates to roughly a 21% loss on that position, while gains from Ford's modest drop would have provided minimal offset.
"This suite is designed to empower investors with strategic tools that harness industry disruption and market evolution," Sylvia Jablonski, CEO of Defiance ETFs, said in the release.
The fund's structure means success requires not just Tesla's growth but Ford's underperformance. Ford's relative stability, combined with its traditional auto business profits, makes it a challenging short target despite EV division losses.
Trading on the NYSE, ELON marks the first in what Defiance ETFs plans as a series of Battleshares funds targeting industry rivalries, with sectors like semiconductors, financial services, and renewable energy in the pipeline.
