The Best ETFs to Short Tesla Stock in 2024

There are a number of ETFs that allow investors who are bearish on Tesla to benefit from TSLA decreasing in price. We’re highlighting the best ETFs to short Tesla stock to give you an overview of what’s available on the market.

However, there are quite a few caveats when it comes to ETFs that are short on Tesla. Unlike traditional ETFs, these ETFs are not designed for long-term holding. If you are going to trade them, you must actively monitor and manage your portfolio to avoid substantial losses.

Before we begin with our list of the best ETFs to short Tesla, let’s quickly go over the concept of inverse ETFs.

What are inverse ETFs?

When we think of ETFs, we typically think of them as products that allow investors to benefit from the success of companies. However, there are also ETFs that are designed to do the opposite, bringing investors profits when the price of a certain stock or other asset declines.

There’s many terms used to refer to such ETFs – examples include “inverse ETF”, “short ETF” or “bear ETF”. These ETFs utilize various financial derivatives such as swaps and options in order to turn a profit when the value of their underlying benchmark declines.

Purchasing shares in an inverse ETF is an alternative to other ways of going short on a stock or other asset, such as futures contracts or put options.   

When considering inverse ETFs, it’s important to understand that these ETFs tend to have significantly higher expense rates than traditional ETFs. In addition, inverse ETFs are not designed for long-term holding, as they are meant to be used as a vehicle for short-term trades.

Inverse ETFs are high-risk products, and the risk increases further when it comes to inverse ETFs that provide leveraged exposure. In addition, inverse ETFs that only track a single stock don’t provide any benefits of diversification.

If you are unsure about the way inverse ETFs function, you should avoid trading them.

The best ETFs to short Tesla

Now, let’s take a closer look at the list of the best ETFs to short Tesla stock. We’ve made sure to highlight ETFs from a variety of issuers and have provided options for traders with varying risk appetites.

• Direxion Daily TSLA Bear 1X Shares (TSLS) – An ETF to short Tesla 
• AXS TSLA Bear Daily ETF (TSLQ) – Inverse TSLA ETF for Tesla bears
• T-Rex 2X Inverse Tesla Daily Target ETF (TSLZ) – A 2x leveraged inverse Tesla ETF for traders with higher risk appetite
• GraniteShares 3x Short Tesla Daily ETP (3STP) – A 3x leveraged short Tesla product for European traders

Direxion Daily TSLA Bear 1X Shares (TSLS) – An ETF to short Tesla

Direxion Daily TSLA Bear 1X Shares (TSLS) is an ETF that aims to provide daily inverse results of Tesla stock. To achieve this, the fund invests into financial instruments such as swaps and options.

This ETF pursues a daily investment objective, which means that investors shouldn’t expect it to track the (inverse) performance of TSLA shares over any period of time that’s longer than one day.

Like most other inverse ETFs, TSLS has a fairly high expense ratio of 1.07% and is not designed for long-term holding periods. The fund is best used for short-term short positions when the investor is bearish on TSLA, or as a short-term hedge.

• Name and ticker: Direxion Daily TSLA Bear 1X Shares (TSLS)
• Expense ratio: 1.07%
• Leverage: -1x
• 200-day volatility (as of Jan 2024): 46.98%

AXS TSLA Bear Daily ETF (TSLQ) – Inverse TSLA ETF for Tesla bears

AXS TSLA Bear Daily ETF (TSLQ) is an ETF that seeks to provide inverse investment results (-100%) based on the daily performance of TSLA stock. 

Similarly to the TSLS ETF we’ve featured above, the TSLQ ETF is also designed for short-term trades and not long-term holding. The two funds are extremely similar in terms of what they provide to investors, but we gave the nod to TSLS since TSLQ has a higher expense ratio of 1.15%. 

• Name and ticker: AXS TSLA Bear Daily ETF (TSLQ)
• Expense ratio: 1.15%
• Leverage: -1x
• 200-day volatility (as of Jan 2024): 47.02%

T-Rex 2X Inverse Tesla Daily Target ETF (TSLZ) – A 2x leveraged inverse Tesla ETF for traders with higher risk appetite

T-Rex 2X Inverse Tesla Daily Target ETF (TSLZ) that looks to provide daily inverse results (-200%) based on the daily performance of TSLA. Like the other inverse ETFs we’re highlighting in this article, the TSLZ fund is also designed to seek its investment objective only for a period of a full trading day.

Since this ETF is leveraged, it’s an even riskier product than the unleveraged inverse ETFs we have featured so far. Therefore, it should be used with caution and only for short-term trades. The TSLZ ETF has an expense ratio of 1.05%. 

• Name and ticker: T-Rex 2X Inverse Tesla Daily Target ETF (TSLZ)
• Expense ratio: 1.05%
• Leverage: -2x

GraniteShares 3x Short Tesla Daily ETP (3STP) – A 3x leveraged short Tesla product for European traders

We’re rounding out our list of the best ETFs to short Tesla with the GraniteShares 3x Short Tesla Daily ETP (3STP), which is a 3x leveraged product that seeks to provide inverse returns to the daily performance of Tesla stock. We should clarify that 3STP is technically an exchange-traded product (ETP) and not an exchange traded fund (ETF).

As an example – if the price of TSLA decreases by 1% over a trading day, the price of 3STP shares should increase by 3% (minus fees). Inversely, if the price of TSLA rises by 1% over a trading day, the price of 3STP shared should decrease by 3%.

Given its 3x leverage, the 3STP ETP is a very high-risk product that should be used with caution. 

Please note that unlike the previous products we have featured so far, which are listed in the United States, the 3STP exchange-traded product is listed on European stock exchanges (London Stock Exchange, Euronext Paris and Borsa Italiana). 

• Name and ticker: GraniteShares 3x Short Tesla Daily ETP (3STP)
• Expense ratio: 0.99%
• Leverage: 3X

The bottom line

There are multiple ETFs and ETPs on the market that allow traders to go short on Tesla. However, these products are relatively complex and their structure makes them only suitable for short-term trades. If you are bearish on Tesla over a longer period of time, these ETFs and ETPs are not a good choice since they are specifically designed for short-term trades. 

If you’re looking for more ways to explore ETFs, make sure to check out our article highlighting the best ETF screeners.