Watching Elon Musk's antics with S&P 500 shares on the side is fun. That’s until you realize you’ve been exposed to them in your ETFs.
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Given Tesla's massive market profits (TSLA) over the years and Musk's partnership with Twitter (TWTR), it is unlikely that your billion-dollar exposure to up to 20% of your assets. That's Tesla's $ 16 billion-in-assets Consumer Discretionary Select Sector SPDR ETF (XLY), EFF reports. But add to the exposure on Twitter, which is more than 12% on the Simplify Volt Pop Culture Disruption ETF (VPOP), you can see how you can quickly put a decent part of your portfolio into Musk's hands.
Investors may want to combine their exposure with just one official, including one as important as Musk. "While investors benefit from the diversity of ETFs, TSLA and TWTR are driven in part by investor confidence in Musk, which provides significant personal risk," said Todd Rosenbluth, head of research at ETF Trends and ETF Database.
What is your exposure to Twitter?
Musk hosted a drama this month with his bid to re-launch the $ 44 billion Twitter messaging service. It has been a difficult journey for anyone who owns stocks.
Twitter stocks rose almost 50% from the bottom in March to peak in April. The Twitter board of directors approved Musk's acquisition of the company on April 25. But the shares have lost about a quarter of their value since then. Musk now shows he is backing down from the deal.
All of this drama did nothing good for some ETFs by posting large portions of their portfolios on Twitter. Simplafy Volt Pop Culture has now lost half of its value this year. But the ups and downs of Twitter are taking bigger ETFs to ride them, too. The $ 37 million Invesco Dynamic Media ETF (PBS) puts 8.4% of its portfolio on Twitter. And the ETF has dropped by 25% this year.
When You Hold Much Musk
Twitter is still in stock in the S&P 500. But in line with Tesla, you are likely to put most of your portfolio in Musk's hands.
Twitter ranks the most important stock of 240 in the S&P 500. It is just a 0.09% position in the SPDR S&P 500 ETF. But Tesla is now fifth in the S&P 500. It holds 1.8%, ahead of 1.30% of Warren Buffett's Berkshire Hathaway (BRKA) and 1.4% in Meta Platforms (META).
But it is not difficult to get more exposure to Musk's Tesla. After a major hold of the Consumer Discretionary Select Sector SPDR in Tesla, there is ProShares Ultra Consumer Goods (UGE), with its portfolio of more than 19% in one stock. Then there is the $ 4 billion Vanguard Consumer Discretionary ETF (VCR) with a position of almost 17%.
To be sure, being part of Musk's businesses is good when they are working. You did not hear many complaints last year when Tesla's shares fell by almost 50%.
But now is the time for investors to raise the risk of Musk, said David Trainer, CEO of the research team New Constructs.
"The Musk saga and Twitter are a warning sign for Tesla shareholders. Not only is stock exchanges completely out of the basics, it is clear that Musk is in a state of shock at the moment," he said. "Tesla is a very important stock and should be avoided and Twitter stock has no excitement and should be avoided."
