Editor’s note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don’t have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.
Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. An investor could lose the full principal value of his or her investment in a single day. Investing in the Funds is not equivalent to investing directly in GOOGL.
Alphabet Inc., the parent company of Google (Ticker: GOOGL), reported its second-quarter results, which came in above expectations. Analysts were looking for an earnings-per-share (EPS)* of $1.34. Actual results came in at $1.44. Will this earnings beat be enough to propel the rally to new highs, or is this the last gasp for the bulls?
Will AI Deal the Deathblow to Google Search?
The tech sector remains captivated by developments in the artificial intelligence space. Google has been involved with the technology, but there are mounting concerns as to whether this could reduce the use of Google search, which is the company’s flagship money-maker.
However, if we dive a bit deeper under the surface, Google has made notable strides incorporating artificial intelligence into its existing services. This includes their Workspace, Maps, and Photos functions.
But the big driver of new revenue growth seems to be emanating from the Google Cloud Platform. More and more companies are investing in cloud infrastructure, and Google is uniquely positioned to capitalize on this investment.
Traders that favor the bullish case in Alphabet may consider Direxion’s Daily GOOGL Bull 1.5X Shares (Ticker: GGLL), which seeks daily investment results, before fees and expenses, of 150% of the daily performance of the Class A shares of Alphabet Inc. (NASDAQ: GOOGL).
To view the fund’s full holdings, click here. Holdings are subject to risk and change.
Below is a daily chart of GOOGL as of July 27, 2023.
Source: TradingView.com
Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than their original cost; current performance may be lower or higher than the performance quoted. For the most recent month-end performance go to Direxion.com/etfs. For standardized performance click here.
What if Alphabet is Falling Behind?
Although Alphabet Inc. is actively participating in the artificial intelligence boom, we still don’t know how impactful artificial intelligence will be when it comes to the public using search engines.
Additionally, Alphabet Inc.’s bears can point to a shrinking position in the digital ad market. The company is losing market share in the digital ad space to competitors like Meta Platforms Inc., Amazon.com Inc., and Alibaba Group Holding Ltd.
For traders that remain skeptical about Alphabet’s future prospects given the current AI landscape, consider Direxion’s Daily GOOGL Bear 1X Shares (Ticker: GGLS), which seeks daily investment results, before fees and expenses, of 100% of the inverse (or opposite), of the daily performance of the Class A shares of Alphabet Inc. (NASDAQ: GOOGL).
*Definitions and Index Descriptions
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
The Funds have derived all disclosures contained in this document regarding Class A shares of Alphabet Inc. from publicly available documents. In connection with the offering of each Fund’s securities, neither the Funds, the Trust, nor the Adviser or any of its respective affiliates has participated in the preparation of such documents. Neither the Funds, the Trust nor the Adviser or any of its respective affiliates makes any representation that such publicly available documents or any other publicly available information regarding Class A shares of Alphabet Inc. is accurate or complete. Furthermore, the Funds cannot give any assurance that all events occurring prior to the date hereof (including events that would affect the accuracy or completeness of the publicly available documents described above) that would affect the trading price of Class A shares of Alphabet Inc. have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of or failure to disclose material future events concerning Class A shares of Alphabet Inc. could affect the value of a Fund’s investments with respect to Class A shares of Alphabet Inc. and therefore the value of the Funds.
Technology Sector Risk – The market prices of technology related securities tend to exhibit a greater degree of market risk and sharp price fluctuations than other types of securities. These securities may fall in and out of favor with investors rapidly, which may cause sudden selling and dramatically lower market prices. Technology securities may be affected by intense competition, obsolescence of existing technology, general economic conditions and government regulation and may have limited product lines, markets, financial resources or personnel.
Alphabet Inc. Class A Investing Risk – Alphabet Inc. faces risks associated with companies in the information technology sector, Alphabet Inc.’s Class A shares face risks associated with reliance on advertising revenue and the effect that loss of partners or new and existing technologies that block advertisements online may have on its business; intense competition for its products and services across different industries; investments in new businesses, products, services and technologies that may divert management attention or harm its financial condition or operating results; slowdowns in its revenue growth rate; the ability to protect its intellectual property rights; the ability to maintain or enhance its brands and its impact on the ability to expand its user base, advertisers, customers, content providers and other partners; manufacturing and supply chain issues; interruptions to, or interferences with, its complex information technology and communication systems; its international operations; failure to evolve with the advancement of technology and user preferences; data privacy and security concerns; regulatory, and legal and litigation issues.
Direxion Shares Risks – An investment in each Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning. Risks of the Funds include Effects of Compounding and Market Volatility Risk, Leverage Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Daily Correlation Risk, Alphabet Inc. Class A Investing Risk, Market Risk, Industry Concentration Risk, Indirect Investment Risk, Trading Halt Risk, Cash Transaction Risk, Tax Risk, and risks specific to the technology sector. Additional risks include, for the Direxion Daily GOOGL Bear 1X Shares, risks related to Shorting. Please see the summary and full prospectuses for a more complete description of these and other risks of the Funds.
Distributor: Foreside Fund Services, LLC.
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