Can profits recharge electric vehicle stocks?

Editor’s Note: All references to time periods greater than one trading day are for market context purposes only and not recommendations of any holding period. Daily rebalancing ETFs are not meant to go unattended for long periods of time. If you don’t have the resources, time or inclination to continuously monitor and manage your positions, leveraged and inverse ETFs are not for you.

It’s been a mixed bag for electric and autonomous vehicle companies. Industry leader Tesla Inc. (NASDAQ: TSLA) recently cut prices for its electric vehicle (EV) models, clearly signaling a drop in demand. Meanwhile, Chinese premium electric vehicle maker NIO Inc. (NYSE: NIO) and battery producer Contemporary Amperex Technology Co. Limited recently announced a five-year agreement to create a new battery power system. batteries and join other initiatives.

However, upcoming earnings reports from Tesla and other innovative industry leaders are what could really set the tone for early 2023. In recent months, the Indxx US Electric and Autonomous Vehicles Index* has been looking for a direction after a decline, much like the overall market.

Indxx US Electric and Autonomous Vehicles Index (9/16/22–1/16/23)

Source: Indxx indices.

Top Earnings Reports to Watch: Tesla and NIO

Telsa is the largest stock in the Indxx American index of electric and autonomous vehicles around 10% of the benchmark as of December 31, 2022. The past few months have been tough for the closely watched stock, and last quarter deliveries were below expectations. There are lingering concerns that CEO Elon Musk will be distracted by also holding the reins of Twitter, Inc. (NASDAQ: TWTR), although there are expectations that he may soon appoint a new Twitter CEO. It could be another potential catalyst for Tesla shares.

Tesla expected to report quarterly results after markets close on Jan. 25. In particular, investors will be looking for any color on Tesla’s recent price cuts and what that means for demand for electric vehicles amid signs of a slowing economy.

NIO, the second largest stock in the Indxx US Electric and Autonomous Vehicles Index, is expected to report quarterly results in March. Shares of the Chinese luxury electric vehicle maker have been on a long decline. The stock peaked in early 2021 and is down more than 60% in the past 12 months. The question is whether the bad news has already factored in and whether NIO and the broader EV industry are ready for a rebound.

When NIO releases its quarterly results, investors will be looking for potential upside amid the easing of China’s COVID-related restrictions and supply chain disruptions. Investors will also be looking for details on the five-year comprehensive strategic cooperation agreement with Contemporary Amperex Technology that the companies recently announced.

Trading the Bull case for electric and autonomous vehicles

Traders looking to take advantage of the upside potential in the high-growth sector with leverage can do so with Direxion’s Bull 2X Daily Electric and Autonomous Vehicles (EVAV) stock. The ETF is a way to play a rally in the electric vehicle sector and its related industries if the upcoming quarterly results report the best expectations. Equities also tend to be very cyclical, so any improvement in economic conditions could be a tailwind.

EVAV targets daily investment results of 200%, before fees and expenses, of the performance of the Indxx US Electric and Autonomous Vehicles Index.

Just want to trade Tesla?

Tesla bulls may eye opportunities in Direxion’s Daily TSLA Bull 1.5X stock (Symbol: TSLL), which is looking to trail 150%, ahead of fees and eTesla bulls may eye opportunities in Direxion’s TSLA Bull 1.5X daily stock (Symbol: TSLL), which seeks to track 150%, before fees and expenses, of the daily performance of Tesla, Inc. common stock. For traders who are bearish on Tesla’s short-term outlook, Direxion offers a Daily TSLA Bear 1X Shares (Symbol: TSLS), which seeks to track 100% of the inverse (or inverse), before fees and expenses, of the daily performance of Tesla, Inc.’s common stock.

Initially published January 24, 2023.

For more news, information and analysis, visit the Leveraged Channel and Reverse Channel.

---

*Definitions

The Indxx US Electric and Autonomous Vehicles Index is designed to track the performance of companies with the potential to disrupt an existing transportation market and bring new, cleaner modes of transportation such as electric and autonomous vehicles.

You cannot invest directly in an index.

An investor should carefully consider the investment objective, risks, charges and expenses of a Sub-Fund before investing. A Sub-Fund’s prospectus and simplified prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus, call 866-476-7523 or visit our website at www.direxion.com. A Fund’s prospectus and simplified prospectus should be read carefully before investing.

Investing in a Direxion Shares ETF may be more volatile than investing in broadly diversified funds. The use of leverage by a Fund increases the risk to the Fund. Direxion Shares ETFs are not suitable for all investors and should only be used by sophisticated investors who understand the risk of leverage, the consequences of seeking daily leveraged or leveraged investment results daily reverse leverage and who intend to actively monitor and manage their investment.

TSLA Trading Risk — The trading price of TSLA has been highly volatile and may continue to experience large swings in response to various factors. The stock market in general, and the market for technology companies in particular, have experienced extreme fluctuations in price and volume that have often been unrelated or disproportionate to the operational performance of these companies.

Tesla Risk — The future growth and success of Tesla, Inc. depends on consumer demand for electric vehicles, and more specifically for its vehicles in a generally competitive, cyclical and volatile automotive industry. If the market for electric vehicles generally and for Tesla, Inc.’s vehicles does not develop as Tesla, Inc. expects, develops more slowly than expected, or if demand for its vehicles declines in our markets or if our vehicles compete, the business, prospects, financial condition and results of operations of Tesla, Inc. could be adversely affected. Tesla, Inc. may not meet its publicly announced guidelines or other business expectations, which could result in a significant decline in the price of TSLA.

Automotive Business Risk: The automotive industry can be very cyclical and companies in the sector can experience periodic operating losses. Automotive companies can be significantly affected by labor relations, fluctuating component prices and supply disruptions. Please see the summary and full prospectus for a more complete description of these and other risks of the Funds.

Risks relating to the Direxion Shares ETF – An investment in the Fund involves risks, including the possible loss of principal. The Fund is not diversified and understands the risks associated with the Fund concentrating its investments in a particular industry, sector or geography, which may increase volatility. The use of derivatives such as futures and swaps is subject to market risks which may cause their price to fluctuate over time. The Fund’s risks include the effects of market capitalization and volatility risk, leverage risk, derivatives risk, market risk, counterparty risk, rebalancing risk, intraday investing, daily index correlation risk, risk associated with other investment companies (including ETFs), and risks specific to investing in electric and autonomous vehicle companies, as well as technology sectors information, industrials and consumer discretionary. General risks for electric and stand-alone businesses include intense competition and rapid product obsolescence, loss or degradation of intellectual property, supply chain disruption, regulatory changes, as well as attack risks. of cybersecurity. Please see the summary and full prospectus for a more complete description of these and other Fund risks.

Distributer: Foreside Fund Services, LLC.

Learn more at ETFtrends.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.