GraniteShares 1.5x Short TSLA Daily ETF (TSDD)

ETF GraniteShares 1.5x Short TSLA Daily ETF (TSLQ) Overview

Profile:

TSLQ is an exchange-traded fund (ETF) designed to provide 1.5 times the inverse daily performance of the Tesla, Inc. (TSLA) stock. It achieves this by utilizing swap agreements and other financial instruments. TSLQ mainly focuses on the technology sector, specifically the electric vehicle industry.

Objective:

The primary objective of TSLQ is to offer investors a short-term tool to profit from a potential decline in Tesla's stock price. This ETF is suitable for investors with a bearish outlook on Tesla or those seeking to hedge against existing Tesla holdings.

Issuer:

GraniteShares is the issuer of TSLQ.

• Reputation and Reliability: GraniteShares is a relatively new ETF issuer, founded in 2016. It is a subsidiary of GraniteShares plc, a UK-based financial services company. While it lacks the long-standing reputation of established players, GraniteShares has built a decent track record in its short existence.
• Management: The ETF is managed by a team of experienced professionals with expertise in quantitative analysis, portfolio construction, and risk management.

Market Share:

TSLQ holds a small market share within the inverse and short ETF space. However, it is the largest and most liquid ETF specifically focusing on shorting Tesla stock.

Total Net Assets:

As of October 27, 2023, TSLQ has approximately $138 million in total net assets.

Moat:

TSLQ's competitive advantages include:

• Unique Strategy: Its focus on providing leveraged inverse exposure to Tesla positions it in a niche market.
• Liquidity: Being the largest and most liquid Tesla inverse ETF makes it attractive to investors seeking to enter and exit positions easily.

Financial Performance:

TSLQ has delivered strong returns when Tesla's stock price has declined. However, its performance has been negative when Tesla's stock price has risen, reflecting its inverse nature.

Benchmark Comparison:

TSLQ's performance is inversely correlated to the performance of the Tesla stock price. Therefore, it is best compared to the inverse of the Tesla stock price or a short position in Tesla stock.

Growth Trajectory:

The growth trajectory of TSLQ is directly tied to the future performance of Tesla's stock price. If Tesla's stock price continues to decline, TSLQ could experience significant growth. However, if Tesla's stock price rises, TSLQ's value could decline.

Liquidity:

TSLQ has a high average daily trading volume, indicating good liquidity. This allows investors to enter and exit positions easily without significantly impacting the ETF's price. The bid-ask spread is also relatively tight, suggesting low transaction costs.

Market Dynamics:

Factors affecting TSLQ's market environment include:

• Tesla's stock price: The ETF's performance is directly tied to the performance of Tesla's stock price.
• Competition: The inverse and short ETF space is becoming increasingly competitive.
• Market volatility: High market volatility can increase the ETF's volatility and magnify its returns, both positive and negative.

Competitors:

Key competitors include:

• ProShares Short Tesla ETF (TSLQ): Largest competitor, also offering 1.5x inverse exposure to Tesla.
• Direxion Daily TSLA Bear 1X Shares (TSLA): Offers 1x inverse exposure to Tesla.

Expense Ratio:

TSLQ has an expense ratio of 0.79%.

Investment Approach and Strategy:

• Strategy: TSLQ aims to provide inverse daily returns to the Tesla stock price.
• Composition: The ETF primarily holds swap agreements and other financial instruments to achieve its objective.

Key Points:

• TSLQ offers leveraged inverse exposure to Tesla, allowing investors to profit from a potential decline in Tesla's stock price.
• The ETF is suitable for short-term investors with a bearish outlook on Tesla or those seeking to hedge existing Tesla holdings.
• TSLQ is the largest and most liquid Tesla inverse ETF, making it an attractive option for investors seeking liquidity.

Risks:

• Volatility: TSLQ is a leveraged ETF, which means its volatility is amplified compared to the underlying asset.
• Market Risk: The ETF's performance is directly tied to the performance of Tesla's stock price. If Tesla's stock price rises, TSLQ's value could decline.
• Tracking Error: TSLQ aims to deliver 1.5 times the inverse daily performance of Tesla, but it may not always achieve this objective perfectly.

Who Should Consider Investing:

• Investors with a bearish outlook on Tesla
• Investors seeking to hedge existing Tesla holdings
• Short-term investors comfortable with high volatility

Fundamental Rating Based on AI

Based on an AI-based analysis considering financial health, market position, and future prospects, TSLQ receives a Fundamental Rating of 6.5 out of 10.

Justification:

• Strengths: TSLQ has a unique strategy, is highly liquid, and benefits from the growing popularity of thematic investing.
• Weaknesses: The ETF's performance is heavily dependent on Tesla's stock price and carries significant volatility. Additionally, the relatively short track record of GraniteShares as an issuer raises some uncertainty.

Resources and Disclaimers:

• Data sources: ETF.com, YCharts, GraniteShares website
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please conduct your own due diligence before making any investment decisions.