TSLY ETF inflows slow as Tesla stock price sell-off continues

on Oct 19, 2023
  • The YieldMax TSLA Option Income Strategy (TSLY) ETF has retreated sharply in the past few days.
  • Tesla reported relatively weak financial results on Wednesday as the EV slowdown continues.
  • The company's revenue growth slowed while its gross and EBITDA margins dropped.

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The YieldMax TSLA Option Income Strategy (TSLY) ETF stock crashed hard on Thursday after Tesla published weak financial results. TSLY retreated to a low of $12.55 as Tesla shares dropped by over 4.7% in the pre-market session. It has dropped by more than 22.2% from the highest point this year.

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The biggest news in the stock market on Thursday was the relatively weak financial results by Tesla. These results confirmed fears that the electric vehicle industry is already slowing as it missed analysts’ forecasts.

The company’s total revenue rose by just 8.8% in Q3 to over $23.35 billion, missing estimates by over $794 million. Its margins also shrank during the quarter. Gross margins narrowed to 17.9% while the total production in the quarter came in at 430k. The company still maintained its production guidance for the year.

Tesla – and other EV companies – are going through major headwinds. For one, there are elevated signs that demand for electric vehicles is not there. As I wrote earlier this week, companies like Ford and General Motors are reducing their EV production.

EV cars are taking longer at dealerships compared to internal combustion engine (ICE) vehicles. Even after the recent price cuts by Tesla and other EV companies, they remain much more expensive than ICE vehicles.

The other challenge for EVs is that their resale values are lower than ICE vehicles because batteries tend to depreciate faster. 

The YieldMax TSLA Option Income Strategy ETF stock plunged as Tesla woes continued. To be clear, the TSLY ETF does not invest directly in TSLY stock. Instead, it seeks to generate monthly income by selling/writing call options on TSLA shares. By doing this, it harvests yields while retaining a capped participation in the gains of TSLA stock, which explains why it has retreated.

TSLY is loved by income investors, thanks to its high yield. Data in its website shows that the 30-day yield stands at 50%. However, this yield should be taken with a grain of salt since distributions tend to differ from month to month.

Recent data shows that the ETF’s inflows have started falling. Monthly inflows peaked at $301 million in August and then dropped to $164 million in September. Its inflows in October stands at $69 million.


TSLY inflows chart

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