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ETFs in Trouble as Tesla Takes the Hit of Musk's Twitter Poll
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The world’s richest man and CEO of arguably the hottest company in the world, Tesla’s (TSLA - Free Report) Elon Musk is again making headlines with his Nov 6 tweet. This time it was a bizarre Twitter poll that read “Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this?”
Musk, who has a massive fan-following of around 62.5 million on Twitter, even pledged to adhere to the poll results. Coming to results where around 3,519,252 people responded, 57.9% voted “Yes.” Now, it will be interesting to watch if Musk actually follows through.
Since the tweet, shares of Tesla have lost nearly 5% and 12% on Nov 8 and 9, respectively. In fact, the billionaire has lost about $50 billion in wealth following the contentious poll. Going by a Bloomberg Wealth report, Tesla’s latest plunge is the biggest two-day decline recorded in the history of the Bloomberg Billionaires Index (as mentioned in The Independent article).
Despite the two-day-long plunge, Tesla has returned 45% this year. The company recently entered the exclusive $1-trillion market capitalization club, joining bigwigs like Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Amazon (AMZN - Free Report) and Google (GOOGL - Free Report) . The electric carmaker also received an order for 100,000 electric vehicles from rental-car icon Hertz Global. The vehicles will be delivered by the end of 2022.
Leading to the strong run this year, the electric carmaker has also posted impressive third-quarter earnings, wherein it surpassed earnings and revenues estimates. Tesla posted record revenues and one of the strongest profit margins in the group's history.
ETFs Under the Heat
Here we mention some ETFs with a double-digit allocation to Tesla that could bear the brunt of its plunge:
Simplify Volt RoboCar Disruption and Tech ETF (VCAR - Free Report)
This is an actively-managed ETF seeking concentrated exposure to the leader of autonomous driving technology and enhancing the concentrated exposure with options. It is heavily exposed to the Tesla stock and Tesla call options at 21.2% share. The fund seeks to boost its performance during extreme moves in Tesla, charging investors 0.95% in annual fees. It has accumulated $7.30 million in its asset base (read: Top-Performing ETFs of Last Week).
The Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
This product offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most popular product in this space with AUM of $23.90 billion. Holding 63 securities in its basket, Tesla takes the second spot with 18.4% of assets. The fund charges 12 basis points (bps) in annual fees (read: Consumer Discretionary ETFs to Gain as COVID-19 Situation Improves).
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 as well as technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials and transportation. This approach results in a basket of 30-50 stocks, with Tesla occupying the top spot with an 11% share. The product has accumulated $2.75 billion in its asset base and charges 75 bps in fees per year (read: 6 ETFs to Ride on Tesla's Trillion-Dollar Market Cap).
This is an actively-managed fund focusing on companies expected to benefit from the shift in technology infrastructure to cloud, enabling mobile, new and local services. The fund holds about 35-55 stocks in its basket, with Tesla occupying the top position at 10.2%. The ETF has amassed $5.58 billion in its asset base and charges 79 bps in annual fees (read: Follow Cathie Wood With These Stocks & ETFs).
This is an actively-managed fund investing in companies that benefit from developing new products or services, technological improvements and advancements in scientific research in fields like Automation, Robotics, and Energy Storage, Fintech Innovation and others. In total, the fund holds about 35-55 securities in its basket, with Tesla occupying the top position, accounting for a 9.7% share. The product has gathered $21.18 billion in its asset base and charges 75 bps in fees per year from investors.
This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket, with Tesla accounting for a 10% share. The product has accumulated $83.3 million in its asset base and charges 58 bps in annual fees (read: ETFs in Focus as Big Tech Q3 Earnings Start to Unfold).
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ETFs in Trouble as Tesla Takes the Hit of Musk's Twitter Poll
The world’s richest man and CEO of arguably the hottest company in the world, Tesla’s (TSLA - Free Report) Elon Musk is again making headlines with his Nov 6 tweet. This time it was a bizarre Twitter poll that read “Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock. Do you support this?”
Musk, who has a massive fan-following of around 62.5 million on Twitter, even pledged to adhere to the poll results. Coming to results where around 3,519,252 people responded, 57.9% voted “Yes.” Now, it will be interesting to watch if Musk actually follows through.
Since the tweet, shares of Tesla have lost nearly 5% and 12% on Nov 8 and 9, respectively. In fact, the billionaire has lost about $50 billion in wealth following the contentious poll. Going by a Bloomberg Wealth report, Tesla’s latest plunge is the biggest two-day decline recorded in the history of the Bloomberg Billionaires Index (as mentioned in The Independent article).
Despite the two-day-long plunge, Tesla has returned 45% this year. The company recently entered the exclusive $1-trillion market capitalization club, joining bigwigs like Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Amazon (AMZN - Free Report) and Google (GOOGL - Free Report) . The electric carmaker also received an order for 100,000 electric vehicles from rental-car icon Hertz Global. The vehicles will be delivered by the end of 2022.
Leading to the strong run this year, the electric carmaker has also posted impressive third-quarter earnings, wherein it surpassed earnings and revenues estimates. Tesla posted record revenues and one of the strongest profit margins in the group's history.
ETFs Under the Heat
Here we mention some ETFs with a double-digit allocation to Tesla that could bear the brunt of its plunge:
Simplify Volt RoboCar Disruption and Tech ETF (VCAR - Free Report)
This is an actively-managed ETF seeking concentrated exposure to the leader of autonomous driving technology and enhancing the concentrated exposure with options. It is heavily exposed to the Tesla stock and Tesla call options at 21.2% share. The fund seeks to boost its performance during extreme moves in Tesla, charging investors 0.95% in annual fees. It has accumulated $7.30 million in its asset base (read: Top-Performing ETFs of Last Week).
The Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
This product offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most popular product in this space with AUM of $23.90 billion. Holding 63 securities in its basket, Tesla takes the second spot with 18.4% of assets. The fund charges 12 basis points (bps) in annual fees (read: Consumer Discretionary ETFs to Gain as COVID-19 Situation Improves).
ARK Autonomous Tech. & Robotics ETF (ARKQ - Free Report)
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 as well as technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials and transportation. This approach results in a basket of 30-50 stocks, with Tesla occupying the top spot with an 11% share. The product has accumulated $2.75 billion in its asset base and charges 75 bps in fees per year (read: 6 ETFs to Ride on Tesla's Trillion-Dollar Market Cap).
ARK Next Generation Internet ETF (ARKW - Free Report)
This is an actively-managed fund focusing on companies expected to benefit from the shift in technology infrastructure to cloud, enabling mobile, new and local services. The fund holds about 35-55 stocks in its basket, with Tesla occupying the top position at 10.2%. The ETF has amassed $5.58 billion in its asset base and charges 79 bps in annual fees (read: Follow Cathie Wood With These Stocks & ETFs).
ARK Innovation ETF (ARKK - Free Report)
This is an actively-managed fund investing in companies that benefit from developing new products or services, technological improvements and advancements in scientific research in fields like Automation, Robotics, and Energy Storage, Fintech Innovation and others. In total, the fund holds about 35-55 securities in its basket, with Tesla occupying the top position, accounting for a 9.7% share. The product has gathered $21.18 billion in its asset base and charges 75 bps in fees per year from investors.
MicroSectors FANG+ ETNs (FNGS - Free Report)
This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket, with Tesla accounting for a 10% share. The product has accumulated $83.3 million in its asset base and charges 58 bps in annual fees (read: ETFs in Focus as Big Tech Q3 Earnings Start to Unfold).