The T-Rex 2X Long MSTR Daily Target ETF (MSTU) saw a substantial drop of 8.05% intraday on Wednesday, underperforming the broader market. This plummet appears to be directly linked to the disappointing fourth-quarter earnings report from MicroStrategy (MSTR), the underlying company that MSTU is designed to track.
MicroStrategy, a leading provider of business intelligence and mobile software, reported an adjusted loss of $3.20 per share for the fourth quarter of 2024, significantly missing analysts' expectations of a $0.05 per share profit. This substantial miss likely spooked investors, causing a sell-off in MSTU, which aims to provide 2x daily leveraged exposure to the performance of MicroStrategy's stock.
As a leveraged ETF, MSTU is designed to amplify the daily movements of MicroStrategy's stock, both on the upside and downside. With MicroStrategy's shares taking a hit following the disappointing earnings release, the leveraged nature of MSTU exacerbated the downward pressure, resulting in the 8.05% plummet observed intraday on Wednesday.
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