The Defiance Daily Target 1.75X Long MSTR ETF (MSTX), a leveraged exchange-traded fund that tracks the performance of MicroStrategy stock with 1.75x daily leverage, experienced a significant pre-market plunge on Tuesday, October 30th, ahead of MicroStrategy's (MSTR) third-quarter earnings report.
The sharp decline in MSTX's price can be attributed to growing investor concerns and bearish sentiment surrounding MicroStrategy's Q3 earnings expectations. According to consensus estimates, analysts expected MicroStrategy to report a quarterly loss of $0.02 per share, which, while an improvement from the previous year, could potentially disappoint investors. Additionally, revenue estimates for the quarter stood at $121.45 million, down 6.2% year-over-year, indicating potential challenges in the company's core business.
These concerns were further amplified after MicroStrategy reported disappointing Q3 results, with losses of $(1.56) per share, missing analyst expectations of $(0.14) by a wide margin. The company also reported quarterly sales of $116.071 million, missing the consensus estimate of $122.660 million by 5.37%. As a result, the Defiance MSTR Leveraged ETF plummeted by over 13% in the aftermath of the earnings release, reflecting the amplified impact of MicroStrategy's poor performance on the leveraged ETF.
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