TSLL Surges 86%. Will it Keep Rallying?

The leveraged Tesla ETF jumped on Monday on word that Tesla would roll out FSD in China.

Shares of Tesla Inc. soared 18% on Monday, adding to their massive gains from last week and boosting exchange-traded funds holding the company's stock, as the electric vehicle maker's robotaxi ambitions advanced.

From its low point a week ago, the stock has jumped over 39%, fueling a whopping 86% return for the Direxion Daily TSLA Bull 2X Shares (TSLL) over that same time frame. After Monday’s surge, TSLL has over $1 billion in assets under management for the first time since December, despite falling  as low as $557 million last week. The fund had pulled in $114.1 million this month before Friday's $30.8 million in outflows. 

China's giving Tesla approval to sell its driver-assistance system sparked Monday’s rally.

Known as Full Self-Driving, or FSD, in the U.S., sales of the system could help arrest the steep slowdown in revenues that Tesla has seen this year (the system costs $8,000 up front or $99 per month in the U.S).  

It would also be a step towards Tesla’s larger goal of rolling out fully autonomous taxis around the world.  

China and Robotaxis

In April, Tesla CEO Elon Musk said that he would unveil his company’s robotaxi on Aug. 8. That announcement, combined with today’s news of a potential FSD rollout in China, has investors excited about the prospect that Tesla could become more than just an electric vehicle manufacturer.  

On the other hand, many Tesla owners say that while it’s made a lot of advancements over the past year, FSD is far from the type of system that could make vehicles truly autonomous.

That raises questions about what Tesla will unveil in August. If the roboxtaxi reveal fails to impress, the stock could quickly retreat back towards last week’s lows.

A steady stream of good news and notable progress towards Tesla’s bold, self-driving future is likely required to offset slowing sales of Tesla’s vehicles and keep the stock rallying.