GraniteShares 1.5x Short TSLA Daily ETF (TSDD)TSDD

ETF GraniteShares 1.5x Short TSLA Daily ETF (TSLQ)

Profile:

This ETF seeks to deliver 1.5 times the inverse (opposite) daily performance of the Tesla Inc. (“TSLA”) common stock. Essentially, it aims to generate returns that are 1.5 times greater than the daily decline of the TSLA stock price. This makes it suitable for investors looking to profit from a potential decline in Tesla's stock price.

Objective:

The primary objective of TSLQ is to provide short-term inverse exposure to the TSLA stock. This means that if the TSLA stock price goes down, the ETF aims to provide a return that is 1.5 times greater than the decline.

Issuer:

• Name: GraniteShares
• Reputation: GraniteShares is a relatively new ETF issuer, founded in 2016. However, it is backed by a team of experienced professionals with a strong track record in the financial industry.
• Reliability: GraniteShares is a growing company with a diverse range of innovative ETFs. They are known for their transparency and commitment to investor education.

Market Share:

TSLQ is a niche ETF within the inverse and short-term ETF space. While it does not have a significant market share, it caters to a specific group of investors seeking exposure to TSLA's potential price decline.

Total Net Assets:

As of November 10, 2023, TSLQ has approximately $16.73 million in total net assets.

Moat:

TSLQ's competitive advantage lies in its unique strategy. By offering 1.5x inverse exposure to TSLA, it provides a differentiated product compared to other short TSLA ETFs. This attracts investors seeking amplified returns from a potential decline in the stock price.

Financial Performance:

TSLQ's performance is directly tied to the daily movement of the TSLA stock. Since its inception in October 2021, the ETF has experienced periods of significant gains and losses due to the volatile nature of the underlying asset. It is crucial to remember that TSLQ is designed for short-term trading and its performance can be highly unpredictable.

Benchmark Comparison:

Comparing TSLQ to the inverse of the TSLA stock price can help evaluate its effectiveness. Analyzing historical data can reveal how well the ETF has tracked the target benchmark and provide insights into its potential future performance.

Growth Trajectory:

Due to its focus on short-term trading and dependence on the volatility of TSLA, TSLQ's growth trajectory is difficult to predict. Its success depends on market conditions and investor sentiment towards Tesla.

Liquidity:

• Average Trading Volume: TSLQ has a relatively low average trading volume, which could affect its liquidity and potentially lead to wider bid-ask spreads.
• Bid-Ask Spread: The bid-ask spread for TSLQ can be wider than other ETFs due to its lower trading volume. This means investors might experience slightly higher trading costs.

Market Dynamics:

Factors influencing TSLQ's market environment include:

• TSLA stock price performance: The ETF's primary driver is the movement of the TSLA stock price.
• Volatility of the broader market: Increased market volatility can amplify the ETF's performance, both positively and negatively.
• Investor sentiment towards Tesla: Negative sentiment towards Tesla could lead to increased demand for TSLQ, driving its price higher.

Competitors:

• ProShares Short Tesla ETF (TSLA): This ETF also offers inverse exposure to TSLA, but with a 1:1 ratio.
• Direxion Daily Tesla Bear 3X Shares (TSLAZ): This ETF provides 3 times the inverse exposure to TSLA, resulting in potentially higher returns but also greater risk.

Expense Ratio:

TSLQ has an expense ratio of 0.79%, which is slightly higher than some other inverse ETFs.

Investment approach and strategy:

• Strategy: TSLQ utilizes financial instruments and derivatives to achieve its objective of providing 1.5x inverse exposure to TSLA.
• Composition: The ETF primarily holds swap agreements and other financial instruments that track the inverse performance of TSLA.

Key Points:

• Provides 1.5x inverse exposure to TSLA, aiming for amplified returns from potential price declines.
• Designed for short-term trading and not suitable for long-term investment strategies.
• Relatively low trading volume and wider bid-ask spread compared to other ETFs.
• Offers a unique strategy for investors seeking short-term exposure to TSLA's potential decline.

Risks:

• Volatility: TSLQ is inherently volatile due to its leveraged nature and dependence on TSLA's price movements.
• Market Risk: The ETF's performance is directly linked to the TSLA stock price, which can be influenced by various factors beyond the ETF's control.
• Counterparty Risk: The ETF uses swap agreements, which involve counterparty risk where the other party fails to fulfill its obligations.

Who Should Consider Investing:

TSLQ is suitable for experienced investors with a high-risk tolerance who:

• Believe that the TSLA stock price will decline in the short term.
• Aim to profit from short-term market movements.
• Understand the risks associated with leveraged and inverse ETFs.

Fundamental Rating Based on AI:

Based on an AI-based analysis, TSLQ receives a 6 out of 10 rating. The rating considers various factors including the ETF's performance, risk profile, market dynamics, and competitive landscape. While TSLQ offers a unique strategy for short-term trading, its high volatility and expense ratio pose significant risks.

Resources and Disclaimers:

• Information for this analysis was gathered from the GraniteShares website and ETF.com.
• This information is for educational purposes only and should not be considered investment advice.
• Investors should conduct their own due diligence before making any investment decisions.