Tesla ETF Drops as EV Maker Faces 2Q Earnings Challenge
The Direxion Daily TSLA Bull 2X Shares (TSLL), a fund designed to deliver double the daily return of Tesla, was hit especially hard, falling 18% midday as Tesla stock dropped 9%.
The electric-vehicle maker reported adjusted earnings per share of $0.40, short of Wall Street's expectations of $0.42. Revenue also missed, coming in at $22.5 billion versus $22.64 billion expected. Sales were down 12% year over year, marking Tesla's steepest annual revenue decline since 2012.
Tesla Hits Speed Bump
The earnings miss wasn't entirely unexpected. Earlier this month, Tesla revealed it delivered only 384,000 vehicles in the second quarter, a 14% drop from a year earlier. But the poor results reinforced the mounting challenges facing Tesla's core EV business—challenges CEO Elon Musk acknowledged directly.
'We probably could have a few rough quarters,' Musk said on the company's earnings call. 'I'm not saying that we will, but we could. Q4, Q1, maybe Q2.'
So far in 2025, Tesla shares are down 25%, while TSLL has plunged 62%, reflecting the leveraged ETF's amplified exposure.
Long-term Projects Drive Optimism
Despite the sell-off, Tesla stock remains within the broad trading range it's occupied for the past five years. The weakness in the EV business—fueled by increasing competition, softening demand, and Musk's polarizing public profile—has been partially offset by investor optimism around Tesla's longer-term projects.
That includes Tesla's robotaxi initiative, which launched limited supervised service in Austin, Texas, last month. Musk said the company hopes to expand ride-hailing operations quickly.
'As we get the approvals and prove out safety, we will be launching the autonomous ride-hailing across most of the country. ... I think we will probably have autonomous ride-hailing in probably half the population of the U.S. by the end of the year.'
Musk also provided an update on Tesla's humanoid robot, Optimus, saying the company expects to unveil prototypes of the third generation by year-end and scale production in 2026.
'We will scale Optimus production as fast as possible and try to get to a million units a year as quickly as possible. ... We think we can get there in less than five years.'
For now, Tesla's lofty ambitions in autonomous vehicles and robotics are helping cushion the blow from a struggling EV business. But unless fundamentals improve, the stock's ability to stay afloat may depend more on future dreams than present-day profits.Permalink | © Copyright 2025 etf.com. All rights reserved
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