Benzinga·2026-01-07 20:06Core Viewpoint - Tesla-linked ETFs are facing renewed pressure as the assumptions behind Tesla's long-term growth are being scrutinized, leading to significant declines in ETF values [1] Group 1: ETF Performance - The ProShares Ultra TSLA ETF (TSLI) has decreased approximately 27% from its peak in December, illustrating the volatility of leveraged exposure when market sentiment shifts [1] - Inflows into the Direxion Daily TSLA Bull 2X Shares (TSLL) reached nearly $4 billion in the first half of 2025, but the fund has experienced consistent outflows since July as investor sentiment has changed [3] - The Roundhill TSLA WeeklyPay ETF (TSLW) has struggled due to sustained weakness in Tesla's stock, affecting both net asset value (NAV) and income potential [4] Group 2: Competitive Landscape - Nvidia's recent announcements regarding AI models for autonomous vehicle development have raised concerns that Tesla's competitive edge may be diluted, as Nvidia enables other automakers to compete more effectively [2][3] - Mobileye Global's $900 million acquisition of an AI humanoid robotics startup highlights the increasing competition in markets that Tesla is targeting for future growth [5] Group 3: Valuation Concerns - Tesla is currently trading at approximately 192.3 times estimated earnings for 2026, indicating that any recalibration of growth expectations could lead to significant losses for leveraged ETFs [6] - The trading of Tesla-linked ETFs is becoming less about fundamentals and more about investor belief, with increased competition posing challenges for Tesla's dominance in the autonomous vehicle space [7]