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 plunge on Tuesday, October 30th, following MicroStrategy's (MSTR) disappointing third-quarter earnings report.
MicroStrategy, the enterprise software company that has made headlines for its aggressive Bitcoin investments, reported a wider-than-expected quarterly loss of $1.56 per share, missing analyst consensus estimates of a $0.14 loss by a wide margin. The company's revenue of $116.1 million also fell short of expectations, coming in at $122.7 million, reflecting challenges in its core business.
The disappointing earnings results from MicroStrategy, coupled with growing investor concerns and bearish sentiment surrounding the company's performance, had already weighed on MSTX in pre-market trading. The leveraged ETF experienced a plunge of around 9.51% before the earnings release, reflecting the amplified impact of MicroStrategy's stock movements on the leveraged fund. Following the earnings report, the sell-off intensified, with MSTX plummeting by over 13% in after-hours trading.