Direxion Daily TSLA Bull 2X Shares (TSLL), a leveraged ETF that aims to deliver twice the daily performance of Tesla's stock, experienced a sharp 5.07% decline during Wednesday's intraday trading. This significant drop comes despite positive news surrounding Tesla's recent battery supply agreement.

The plunge in TSLL's value is particularly noteworthy given that Tesla (TSLA) itself was reported to be trading slightly higher earlier in the day. Multiple news sources revealed that Tesla has signed a $4.3 billion deal with South Korea's LG Energy Solution (LGES) for the supply of energy storage system batteries. This agreement, set to run from 2027 to 2030, involves lithium iron phosphate (LFP) batteries to be manufactured at LGES's Michigan factory, potentially reducing Tesla's reliance on Chinese imports and mitigating tariff risks.

The contrasting movements between TSLL and Tesla's stock highlight the amplified volatility inherent in leveraged ETFs. While the underlying reasons for TSLL's sharp decline remain unclear, it's possible that broader market factors or specific concerns about Tesla's future performance are at play. For instance, recent reports of protests against a Tesla diner project due to noise concerns could be contributing to investor unease. As a leveraged product, TSLL is particularly sensitive to short-term market sentiment and can experience exaggerated price swings compared to the underlying asset it tracks.