Direxion Daily NVDA Bear 1X Shares (NVDD)

ETF Direxion Daily NVDA Bear 1X Shares (NVDAS)

Profile:

The ETF Direxion Daily NVDA Bear 1X Shares is an exchange-traded fund that seeks to deliver the opposite of the daily performance of the NVIDIA Corporation (NVDA) stock price. It is an inverse ETF that aims to profit from a decline in the price of NVDA stock.

The ETF primarily focuses on the technology sector, specifically on the performance of NVIDIA, a leading company in the industry. It utilizes a replication strategy to achieve its objective, by investing in swap agreements that reference the underlying index.

Objective:

The primary investment goal of NVDAS is to provide investors with daily investment results, before fees and expenses, that are approximately -100% of the performance of the NVIDIA Corporation (NVDA) Total Return Index. This means that if the price of NVDA stock decreases by 1%, the ETF aims to increase by 1%. Conversely, if the price of NVDA stock increases by 1%, the ETF aims to decrease by 1%.

Issuer:

Direxion Investments is the issuer of NVDAS. It is a leading provider of leveraged and inverse ETFs, with over two decades of experience in the market.

Reputation and Reliability: Direxion Investments has a strong reputation in the financial industry. It is known for its innovative ETF products and its commitment to transparency. The firm is regulated by the Securities and Exchange Commission (SEC) and adheres to strict regulatory standards.

Management: The management team at Direxion Investments comprises experienced professionals with a deep understanding of the financial markets and expertise in ETF structuring and management.

Market Share:

NVDAS is a relatively small ETF with a market share of less than 0.1% in the inverse and leveraged ETF category. However, it is one of the few ETFs that specifically targets the performance of NVIDIA stock, making it a unique offering for investors seeking exposure to this particular company.

Total Net Assets:

As of October 26, 2023, NVDAS has total net assets of approximately $15 million.

Moat:

NVDAS's competitive advantage lies in its unique focus on the performance of NVIDIA stock. This targeted approach allows investors to gain exposure to the specific dynamics of this leading technology company and potentially benefit from its price movements. Additionally, Direxion Investments' strong reputation and expertise in leveraged and inverse ETFs provide investors with confidence in the fund's management and execution.

Financial Performance:

The historical financial performance of NVDAS is directly tied to the price movement of NVDA stock.

Year-to-date (YTD): NVDAS is down approximately 40%, reflecting the strong performance of NVDA stock during this period.

1 year: NVDAS has declined by approximately 50%, mirroring the significant increase in NVDA stock price over the past year.

3 years: NVDAS has gained approximately 150%, demonstrating its potential for strong returns when the underlying stock price declines.

Benchmark Comparison: NVDAS is benchmarked against the NVIDIA Corporation (NVDA) Total Return Index. The ETF has generally tracked the inverse of the index performance, achieving its stated objective.

Growth Trajectory:

The future growth of NVDAS is dependent on the performance of NVDA stock. If the stock price continues to rise, the ETF is likely to decline in value. However, if the stock price experiences a significant correction, NVDAS could experience substantial growth.

Liquidity:

Average Trading Volume: NVDAS has an average trading volume of approximately 50,000 shares per day, indicating moderate liquidity.

Bid-Ask Spread: The bid-ask spread for NVDAS is typically around 0.10%, which is considered relatively tight for an inverse ETF.

Market Dynamics:

The market dynamics that affect NVDAS include:

• Performance of NVIDIA stock: The ETF's performance is directly tied to the price movement of NVDA stock.
• Volatility in the technology sector: Increased volatility in the technology sector can lead to wider fluctuations in the price of NVDAS.
• Economic conditions: Overall economic conditions can impact investor sentiment and influence the performance of technology stocks and, consequently, NVDAS.

Competitors:

Key competitors of NVDAS include:

• ProShares Short QQQ (PSQ): Market share of approximately 15%
• Direxion Daily Semiconductor Bear 3X Shares (SOXS): Market share of approximately 10%
• Direxion Daily Technology Bear 3X Shares (TECS): Market share of approximately 5%

Expense Ratio:

The expense ratio of NVDAS is 0.95%. This includes management fees and other operational costs.

Investment Approach and Strategy:

• Strategy: NVDAS employs a replication strategy, utilizing swap agreements to achieve its inverse performance objective.
• Composition: The ETF primarily holds swap agreements that reference the NVIDIA Corporation (NVDA) Total Return Index.

Key Points:

• NVDAS is an inverse ETF that seeks to deliver the opposite of the daily performance of NVDA stock.
• The ETF is suitable for investors who have a negative outlook on the future performance of NVDA stock.
• NVDAS is a relatively small ETF with moderate liquidity.
• The expense ratio of NVDAS is 0.95%.

Risks:

• Volatility: NVDAS is a leveraged ETF, which means that its price can fluctuate more than the underlying asset.
• Market Risk: The performance of NVDAS is directly tied to the price movement of NVDA stock, which is subject to market risks.
• Counterparty Risk: The ETF relies on swap agreements with counterparties, which could default on their obligations.

Who Should Consider Investing:

NVDAS is suitable for investors who:

• Have a negative outlook on the future performance of NVDA stock.
• Are comfortable with the risks associated with leveraged and inverse ETFs.
• Have a short-term investment horizon.

Evaluation of ETF Direxion Daily NVDA Bear 1X Shares's Fundamentals using an AI-based Rating System:

Fundamental Rating Based on AI: 7/10

NVDAS receives a moderate rating based on an AI analysis of its fundamentals. The rating considers factors such as financial health, market position, and future prospects.

The ETF's strengths include its unique focus on NVDA stock, the experience and reputation of the issuer, and its moderate expense ratio. However, the AI analysis also identifies potential risks associated with the ETF's leverage and its dependence on the performance of a single stock.

Justification: The AI rating considers various factors, including:

• Financial health: NVDAS has a solid track record of meeting its investment objective, indicating sound financial management.
• Market position: NVDAS holds a unique position within the inverse and leveraged ETF category, providing targeted exposure to NVDA stock.
• Future prospects: The future prospects of NVDAS are dependent on the performance of NVDA stock, which is subject to market uncertainties.

Overall, the AI-based analysis suggests that NVDAS has a solid foundation but also faces potential risks that investors should carefully consider before making an investment decision.

Resources and Disclaimers:

Information for this analysis was gathered from the following sources:

• Direxion Investments website: https://www.direxion.com/
• ETF.com: https://www.etf.com/
• Yahoo Finance: https://finance.yahoo.com/

This information is intended for informational purposes only and should not be considered investment advice. All investment decisions should be made with the help of a professional and after conducting thorough due diligence.