Direxion Daily TSLA Bull 2X Shares (TSLL) plunged 7.98% in after-hours trading on Wednesday following Tesla's release of its second-quarter earnings report. The leveraged ETF, which aims to deliver twice the daily performance of Tesla stock, dropped sharply as investors reacted to Tesla's disappointing financial results and cautious forward guidance.
Tesla reported second-quarter revenue of $22.5 billion, down 12% year-over-year and slightly below analyst expectations of $22.79 billion. Earnings per share came in at $0.40, missing forecasts of $0.43 and representing a 23% decline from the same period last year. The company's automotive revenue, which accounts for the majority of its business, fell 16% to $16.66 billion. Tesla CEO Elon Musk warned that the company could face "a few rough quarters" ahead, citing challenges such as the expiration of EV tax credits and potential impacts from new tariffs.
Despite some positive developments, including an improvement in gross margin to 17.2% from 16.3% in the previous quarter and reaffirmed plans for production of a more affordable vehicle model in the second half of 2025, investors seemed to focus on the near-term headwinds. The company's regulatory credit revenue, a significant contributor to profitability, declined by more than half compared to the previous year. Additionally, Tesla reduced its capital expenditure forecast for the year, suggesting a more cautious approach to expansion.
The sharp decline in TSLL reflects the amplified impact of Tesla's earnings miss on the leveraged ETF. As Tesla faces challenges in maintaining its growth trajectory amidst increasing competition and changing market conditions, investors will be closely watching the company's ability to execute on its future plans, including the expansion of its autonomous vehicle program and the launch of new products like the Cybertruck and Semi.
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