Nvidia leveraged ETF hit hard with a 25% crash!

wallstreetcn ·  Jun 24 21:17

After briefly becoming the world's largest company by market capitalization last week, Nvidia's impressive gains are on hold.

Over the past three trading days, Nvidia has accumulated a cumulative decline of 13%, and the market value evaporated by about 400 billion US dollars. This fluctuation not only affected Nvidia stock holders, but also had a huge impact on retail investors who invested in leveraged ETFs.

Last week, doubling Nvidia's ETF GraniteShares 2x Long NVDA Daily ETF (NVDL) attracted a record inflow of $743 million, attracting a large number of investors looking to amplify Nvidia's original stock earnings.

However, this timing was quite unfortunate; since closing last Tuesday, the ETF has plummeted by about 25%. Despite this, NVDL has maintained a 347% increase so far this year.


JonesStrading's ETF director Dave Lutz warned:

Investing heavily in Nvidia leveraged ETFs is a high-risk, high-return move... Retail investors need to fully understand the structure of such products to fully grasp the risks involved.

This highly leveraged ETF uses derivatives to amplify returns or reverse performance, so it may bring huge returns, but it also has a huge risk of loss.

Since its launch in December 2022, NVDL has attracted around $3.7 billion in assets. In 2024 alone, there was an inflow of about $1.8 billion, compared to an inflow of only $189 million for the full year of 2023.

As the core target of the artificial intelligence boom and the “most important stock on Earth,” Nvidia has risen about 140% since this year.

Investors who shorted Nvidia have been hit hard this year. The GraniteShares 2x Short NVDA Daily ETF (NVD), which tracks Nvidia stock's daily reverse returns, has dropped nearly 90% this year.

Although Nvidia is currently temporarily in an adjustment, some market analysts are still optimistic about the stock's performance.

Jane Edmondson, Head of Thematic Strategy at TMX Vettafi, told the media:

After experiencing huge increases, Nvidia and its AI peers do need to adjust. Investors are likely to make profit settlements and realign their portfolios by the end of the quarter. But the fundamentals underpinning these companies are still there.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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