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A man wearing a face mask following the coronavirus disease (COVID-19) outbreak walks by Tesla Model 3 sedans and Tesla Model X sport utility vehicle at a new Tesla showroom in Shanghai, China May 8, 2020.

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

LONDON (Reuters Breakingviews) – STRAP IN TIGHT. Elon Musk fans around the world have ever more ways of showing their appreciation. Leverage Shares, a creator of exchange traded products, is listing one on Paris’s Euronext that offers exposure to just Tesla, leveraged three times. Such securities are quick ways of making short-term geared punts, without needing to open a brokerage account or dabble in derivatives. The ETP buys the shares and borrows in the market, taking a 75-basis point fee plus margin costs. Leverage Shares offers the product for other companies like Alphabet, as well as “inverse” ETPs, for betting against stocks.

There are reasons to be nervous about Tesla’s valuation. Even with its sales growth slowing, Musk’s group is still valued at nearly 100 times 2023 earnings, according to Refinitiv. Traditional carmakers like Volkswagen are catching up with their own electric vehicles ranges. The Tesla leveraged ETP is up 21% in the last month. Past performance is unlikely to be a good guide. (By Neil Unmack)

Breakingviews

Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

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