Home » Nvidia leveraged ETFs skyrocket 425% YTD, plunges 30% in recent sell-off

Nvidia leveraged ETFs skyrocket 425% YTD, plunges 30% in recent sell-off

by Simon Jones Tech Reporter
27th Jun 24 12:18 pm

The proliferation of single-stock ETFs has piqued the interest of prominent corporations, including the chipmaker Nvidia.

In the past year, Nvidia deviated from the conventional ETF purchase and leveraged on single underlying stocks, hoping to magnify its investment returns.

This decision has proven lucrative for Nvidia, as it accumulated over $5 billion in assets across these new funds.

The standout performer has been the T-REX 2X Long Nvidia Daily Target ETF, which delivered an impressive 425% year-to-date return.

However, the fund tumbled by 30% in the recent sell-off, in line with a 16% decline in Nvidia’s stock price, underscoring the heightened volatility and risks inherent in such highly leveraged, single-stock exposures.

Tech giants join Nvidia in trading single stock ETFs

Inspired by Nvidia’s outstanding performance in single-stock ETF purchases, leading tech giants Apple, Microsoft, Amazon, and Meta have followed suit, seeking to replicate the outsized returns. Unfortunately, the billion-dollar windfall these firms had envisioned has failed to materialize, as they have been forced to settle for a mere fraction of that, with returns capped at under $500 million.

For instance, the three ETFs offering double the bullish leverage for Apple’s shares have pulled in only about $157 million in assets. Moreover, all the leveraged ETFs targeting Alphabet, Amazon, Meta Platforms, and Microsoft have drawn in just over $444 million in assets.

On the other hand, Tesla has had a bit more luck than its counterparts, with its single-stock ETFs amassing billions in assets. The T-REX 2X Long Tesla Daily Target ETF, the Direxion Daily TSLA Bull 2X Shares, and the GraniteShares 2x Long TSLA Daily ETF account for a notable $1.5 billion in assets under management.

However, while Tesla ETFs have fared better than those tracking Apple or Microsoft, they still fall short of matching the remarkable success of Nvidia-related funds, specifically the Direxion Daily TSLA Bull 2X Shares ETF. The fund plummeted by 70% from its peak nearly two years ago. This steep decline mirrors the substantial 37% drop in Tesla’s stock price over the same period.

Nvidia’s 16% stock price decline

Nvidia is reeling from huge losses, losing about $431 billion in four days. The 16% slump in stock prices has scraped notable gains for the company, with its market cap now just under $ 3 trillion.

Last Thursday, Nvidia’s stock price rose astoundingly to an impressive $140.76. However, later that evening, the price slipped drastically to $130 per share, culminating in a 7% drop. The company’s pains aggravated with a 3% slump on Friday and an additional 7% decline on Monday, resulting in a cumulative 16% loss.

The stock dip is mainly due to investors taking their profits following the stock gains in the last two years. Several investors have been seen selling their stocks, including Nvidia CEO Jensen Huang, who sold about 720000 shares since June 13.

Ray Wang, the founder of Constellation Research, has also attributed the recent decline in Nvidia’s stock to investors cashing out their positions. In an interview on Monday, Wang contended that this stock price dip is a chance for investors to buy Nvidia shares.

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