Source: Wall Street See
The leveraged ETF NVDL, which tracks twice the daily returns of Nvidia, attracted over $700 million in inflows last week. However, the timing of this choice was unfortunate as the ETF has fallen by about 25% since last Tuesday's close. Analysts believe that Nvidia's fundamentals are still intact, and the stock price has fallen because some investors tend to close their profits at the end of the quarter.
After briefly becoming the world's largest global company in terms of market cap last week,$NVIDIA (NVDA.US)$the amazing rise of Nvidia is now taking a pause.
Over the past three trading days, Nvidia has fallen by a total of 13%, evaporating about $400 billion in market cap. This volatility not only affects Nvidia stockholders, but also brings huge impacts to leveraged ETF investors.
Last week, GraniteShares 2x Long NVDA Daily ETF, which doubles long positions in Nvidia,$GraniteShares 2x Long NVDA Daily ETF (NVDL.US)$However, the timing of this choice was unfortunate as the ETF has fallen by about 25% since last Tuesday's close. Despite this, NVDL has maintained a high gain of 329% so far this year.
Investors who shorted Nvidia have suffered a heavy blow this year. GraniteShares 2x Short NVDA Daily ETF, which tracks the daily inverse returns of Nvidia's stocks,
Dave Lutz, ETF chief strategist at JonesTrading, warns:
Investing heavily in leveraged ETFs on Nvidia is a high-risk, high-reward move... Retail investors need to fully understand the structure of such products in order to fully understand the risks involved.
This high-leverage ETF uses derivatives to amplify returns or reverse performance, which may bring lucrative returns, but also carries huge risks of losses.
Since its launch in December 2022, NVDL has attracted about $3.7 billion in assets. In 2024 alone, about $1.8 billion flowed in, compared to only $189 million for the entire year of 2023.
As the core symbol of the AI boom and the "most important stock on earth," Nvidia has risen by about 140% this year.
has fallen by nearly 90% this year.$GraniteShares 2x Short NVDA Daily ETF (NVD.US)$It has fallen nearly 90% this year.
Although Nvidia is currently undergoing a temporary adjustment, some market analysts still hold a bullish view on its performance.
Jane Edmondson, Director of TMX VettaFi Theme Strategies, told the media:
After experiencing huge price increases, Nvidia and its AI peers really need to adjust. Investors may take profits and re-adjust their investment portfolio configurations at the end of the quarter. However, the fundamentals (of the company) which support these companies still exist.
Editor/tolk