Tap Tesla's Better-Than-Expected Q2 Deliveries With These ETFs

Tesla Inc. TSLA rose more than 10% on Jun 2 to its highest level in six months following stronger-than-expected vehicle delivery numbers for Q2. The numbers point to improved demand that may help ease concerns around excess inventory for its flagship Model 3/Y.

Investors seeking to tap the strong growth should buy ETFs having a substantial allocation to this luxury carmaker. These include Direxion Daily TSLA Bull 1.5X Shares TSLL, MeetKevin Pricing Power ETF PP, Consumer Discretionary Select Sector SPDR Fund XLY, Simplify Volt Robocar Disruption and Tech ETF VCAR and ARK Innovation ETF ARKK.

This leading electric carmaker delivered 443,956 (422,405 Model 3/Y and 21,551 other models) cars worldwide in the second quarter. Though it is down 4.8% from the year-ago quarter, delivery numbers were better than the 436,000 that analysts had expected. The annual drop in sales reflects the increased competition in the electric vehicles market. The sales of electric vehicles were at a slower pace, which resulted in investors demanding each car sold be more profitable than before. Tesla produced 410,831 (386,576 Model 3/Y, and 24,255 other models) vehicles during the quarter.

Tesla provided $2,000 off the prices of three of its five models in the United States in April. It reduced prices for Model Y, its most popular model and the top-selling electric vehicle in the United States, Model X and Model S. For the first half of the year, Tesla delivered 830,766 electric vehicles worldwide, beating China's BYD, which sold 726,153 electric vehicles.

The strong delivery numbers indicate that Tesla's turnaround might have started. In a letter to shareholders in the last reported earnings, the leading electric carmaker said that it will accelerate the launch of new, affordable EV models, whose production might begin in early 2025, ahead of the initial target in the second half of 2025. The new and more affordable models will be built on Tesla's next-generation platform and will be produced on the same production sites as Tesla's current offerings. Additionally, Tesla is working toward increasing production by 50% this year.

Further, Tesla is betting on driverless software and artificial intelligence in an attempt to revive sales. It is slated to introduce "robotaxis" — a driverless car without a steering wheel or pedals on Aug 8. The next-generation vehicle is widely thought to be key to the electric automaker's survival, especially as competition heats up in the EV space.

ETFs in Focus

Direxion Daily TSLA Bull 1.5X Shares (TSLL)
With AUM of $1.5 billion, Direxion Daily TSLA Bull 1.5X Shares is by far the largest U.S.-listed single-stock ETF on the market. It offers 1.5 times (150%) the daily percentage change of the common stock of Tesla, charging 86 bps in annual fees. TSLL trades in an average daily volume of 29 million shares.
MeetKevin Pricing Power ETF (PP)
MeetKevin Pricing Power ETF is an actively managed ETF that seeks to achieve its investment objective by investing primarily in U.S.-listed equity securities of Innovative Companies that, in Kevin's view, have more "pricing power" than their peers. The fund holds a small basket of 25 stocks, with Tesla occupying the top position at 18%.

MeetKevin Pricing Power ETF has accumulated $45.3 million in its asset base. It charges 77 bps in annual fees and trades in a lower volume of 22,000 shares a day on average.
Consumer Discretionary Select Sector SPDR Fund (XLY)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. Holding 52 securities in its basket, Tesla takes the second spot with 17.1% of the assets.

Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $19.5 billion and an average daily volume of around 3 million shares. It charges 9 in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Simplify Volt Robocar Disruption and Tech ETF (VCAR)
Simplify Volt Robocar Disruption and Tech ETF is an actively managed ETF seeking concentrated exposure to the leader of autonomous driving technology. It employs a call option overlay to seek boosts in performance during extreme moves up in Tesla while holding a tech index for diversification and put options as a hedge.

Simplify Volt Robocar Disruption and Tech ETF charges investors 0.95% in annual fees. It has accumulated $3.8 million in its asset base while trading in an average daily volume of 2,000 shares.
ARK Innovation ETF (ARKK)
ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to the areas of DNA Technologies and Genomic Revolution, Automation, Robotics, Energy Storage, Artificial Intelligence, Next Generation Internet and Fintech Innovation. In total, the fund holds 35 securities in its basket, with Tesla occupying the top spot at 14.6%.

ARK Innovation ETF has gathered $6.1 billion in its asset base and charges 75 bps in fees per year from investors. It trades in an average daily volume of 10 million shares.

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