Ride On Tesla's Q2 Earnings Beat With These ETFs

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Tesla Motors (TSLA - Free Report) reported robust Q2 results, wherein it beat both earnings and revenue estimates. However, shares of Tesla declined about 4% in after-hours trading on concerns over whether the price cuts can boost sales going forward while preserving the profit margins.

Investors could take advantage of the dip in prices by considering ETFs having a substantial allocation to this luxury carmaker. These include Direxion Daily TSLA Bull 1.5X Shares (TSLL - Free Report), MeetKevin Pricing Power ETF (PP - Free Report), Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report), ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report) and Vanguard Consumer Discretionary ETF (VCR - Free Report).

Q2 Earnings in Focus

Adjusted earnings per share came in at 91 cents, beating the Zacks Consensus Estimate by 8 cents and higher than the year-ago earnings of 76 cents. Revenues jumped 47% year over year to $24.93 billion and came above the Zacks Consensus Estimate of $24.88 billion.

However, Tesla’s profit margins slipped due to a series of price cuts this year. CEO Elon Musk said on the conference call that Q3 production would decrease slightly due to factory upgrades.

After two years of delay, the carmaker rolled out its first electric pickup — a slick-looking silver Cybertruck — at its huge plant near Austin, TX. The initial production is slated to begin "later this year" along with initial customer deliveries. The pickup is expected to bring the automaker into another profitable EV segment in the United States.

Tesla reported record deliveries for the second quarter of 2023, signaling its growing dominance in the electric vehicle market as the company continues to expand its production and sales globally. The leading electric carmaker delivered a record 466,140 (446,915 Model 3 and Y and 19,225 Model S and X) cars worldwide in the second quarter, up 83% from the year-ago quarter and 10% from the prior quarter. The electric carmaker produced a record 479,700 (460,211 Model 3 and Y, and 19,489 Model S and X) vehicles during the quarter.

With this, Tesla delivered a total of 888,000 vehicles during the first half of 2023 and is on track to achieve its guidance of 1.8 million vehicles for 2023.

ETFs in Focus

Direxion Daily TSLA Bull 1.5X Shares (TSLL)

With AUM of $984.7 million, Direxion Daily TSLA Bull 1.5X Shares is just an 11-month-old ETF and is by far the largest U.S.-listed single-stock ETF on the market today. TSLL offers 1.5 times (150%) the daily percentage change of the common stock of Tesla, charging 95 bps in annual fees. It trades in an average daily volume of 13 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 18 stocks, with Tesla occupying the top position at 23.3%.

MeetKevin Pricing Power ETF debuted in the space at the end of November and has accumulated $42.3 million in its asset base. It charges 77 bps in annual fees and trades in a lower volume of 34,000 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 53 securities in its basket, Tesla takes the second spot with 20.3% of the assets.

Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $17.3 billion and an average daily volume of around 4.7 million shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

ARK Autonomous Technology & Robotics ETF (ARKQ)

ARK Autonomous Technology & Robotics ETF 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 37 stocks, with Tesla occupying the top spot with a 15% share.

ARK Autonomous Technology & Robotics ETF has accumulated $1.1 billion in its asset base and charges 75 bps in fees per year. It trades in a volume of 128,000 shares a day on average.

Vanguard Consumer Discretionary ETF (VCR)

Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 308 stocks in its basket. Of these, Tesla occupies the second position with a 15.1% allocation. Broadline retail takes the largest share at 25%, while automobile manufacturers, restaurants and home improvement retail round off the next three spots.

Vanguard Consumer Discretionary ETF charges investors 10 bps in annual fees, while volume is moderate at nearly 68,000 shares a day. The product has managed about $5 billion in its asset base and carries a Zacks ETF Rank #1 with a Medium risk outlook.

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