ETFs To Watch As Tesla Tanks On Big Loss & Model 3 Delays

After the closing bell on Wednesday, Tesla Motors TSLA reported disappointing results for the third quarter of 2017. The electric carmaker reported the biggest loss ever in its history, missing our earnings estimate despite better-than-expected revenue numbers. It also failed to live up to the Model 3 production goal in the quarter, reflecting production issues.

Tesla Q3 in Focus

Adjusted loss per share came in at $2.92, much wider than the Zacks Consensus Estimate of a loss of $2.45 and the year-ago loss of $1.33 per share. Revenues climbed 30% to $2.98 billion and edged past the Zacks Consensus Estimate of $2.92 billion (read: ETF & Stocks to Buy on Rebounding September Auto Sales).

Tesla delivered 26,137 vehicles (25,915 Model S and Model X combined, and 222 Model 3) during Q3, up 4.5% from the year-ago quarter. While Model S and Model X deliveries hit a record, the company missed the Model 3 production target of 1,500 vehicles due to the "production bottlenecks". As such, the automaker pushed back the Model 3 production target of 5,000 vehicles per week to the first quarter of 2018 from the end of 2017.
 
However, the company is on track to deliver about 100,000 Model S and Model X this year, reflecting an increase of 30% from last year.

ETFs to Watch

Given the Q2 earnings miss and Model 3 production delays, shares of Tesla tanked as much as 5.4% in aftermarket hours on elevated volume. The rough trading is likely to continue in the ETF world for funds having substantial allocation to this luxury carmaker. Tesla currently has a Zacks Rank #5 (Strong Sell) and a VGM Style Score of F (see: all the Alternative Energy ETFs here).

As a result, investors should closely monitor the movement in these ETFs and grab opportunities from the rising stock price or avoid them if the stock drags them down.

VanEck Vectors Global Alternative Energy ETF GEX

This ETF tracks the Ardour Global Index Extra Liquid, focusing on global companies that are primarily engaged in the business of alternative energy. The fund holds about 31 stocks in its basket with AUM of $86.5 million while charging 62 bps in fees per year. Average daily volume is paltry at about 5,000 shares. Tesla occupies the third position in the basket with 9.5% allocation. In terms of country exposure, the fund is skewed toward the United States with 57.2% share, while Denmark and China round off the top three spots.

ARK Industrial Innovation ETF ARKQ

This is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvement and advancements in scientific research related to robotics, energy storage, innovative materials, alternative energy sources, infrastructure development, space exploration, autonomous vehicles and 3D printing. This approach results in a basket of 43 stocks, with TSLA occupying the second spot with 8.7% share. The product has accumulated $95.2 million in its asset base and charges 75 bps in fees per year. It sees a lower volume of about 35,000 shares a day (read: 5 ETFs to Buy on 13-Year High Manufacturing Activity).

First Trust NASDAQ Clean Edge Green Energy Index Fund QCLN

This fund tracks the Nasdaq Clean Edge Green Energy Index and manages assets worth $82.5 million. It charges 60 bps in fees per year while trades in a light volume of around 27,000 shares per day. In total, the product holds 37 U.S. securities with Tesla Motors taking the fourth spot holding 6.8%. Semiconductors dominate this ETF, accounting for 31.4% of the assets while electrical components & equipment, renewable energy equipment, and alternative electricity round off the next three spots with a double-digit allocation each.

ARK Innovation ETF ARKK

Like ARKQ, this is also an actively managed fund and follows the same strategy but provides exposure to genomic companies, industrial innovation companies or Web x.0 companies. In total, the fund holds 52 securities in its basket, with Tesla occupying the top position, holding 6% share. The product has accumulated $205.2 million in its asset base and trades in a moderate volume of about 86,000 shares. Expense ratio comes in at 0.75%.

Global X Lithium & Battery Tech ETF LIT

The product provides global exposure to a broad range of firms engaged in lithium mining, refining, and battery production by tracking the Solactive Global Lithium Index. Holding 36 securities in its basket, Tesla takes the ninth spot with 4.2% share. American firms dominate the portfolio with 36% of assets while Chile and South Korea have a double-digit allocation each. From a sector look, the ETF is heavy on materials with 65% share, closely followed by consumer discretionary (13%), technology (12%) and industrials (10%). The fund has amassed $944.5 million in its asset base and trades in solid volume of nearly 414,000 shares per day. Expense ratio comes in at 0.76% (read: Inside The Surge in Lithium ETF).

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