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Direxion Semiconductor ETF (SOXL) Stock Is Down 76%. What’s Next?

Trade SOXL stock Your capital is at risk
Updated 15 Jun 2022

Key points:

  • The Direxion Semiconductor ETF (SOXL) stock price is down 76% YTD.
  • The ETF is leveraged 3X and is meant to reflect daily gains or losses.
  • Regular investors should stay away from SOXL due to its decaying nature.

The Direxion Daily Semiconductor Bull 3X Shares (NYSEARCA: SOXL) stock price has fallen 76% in 2022 and recently fell further. So is there an end in sight? Unfortunately not, SOXL is a well-known value destroyer and has fallen thousands of per cent over the years since its inception in March 2010.

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Also read: What Are The Best Performing ETFs In 2022.

The inverse 3X ETF has had multiple reverse stock splits over the years, including one recently but continues to lose value because it is a leveraged ETF. The ETF seeks to achieve a 300% return on the daily movements in the underlying target index, the ICE Semiconductor Index (ICESEMIT).

Returning readers know that we always discourage retail investors from buying leveraged ETFs, which we regard as extremely poor long-term bets due to their decaying value. Therefore, most retail investors should avoid leveraged ETFs such as SOXL.

Those who trade SOXL stock should do so on a very short-term basis targeting moves that play out in a day or a couple of days. This is because, over the long term, SOXL is guaranteed to lose investors' money.

SOXL tracks the performance of semiconductor manufacturers such as Nvidia, Intel, Broadcom, and Qualcomm and is supposed to reflect three times the gains or losses witnessed in the underlying index.

The ETF is currently down 76%, while stocks such as Nvidia are down 45% because it is a leveraged ETF that aims to replicate three times the gains or losses witnessed in the underlying index.

The value of the SOXL price is calculated daily to reflect the daily gains or losses. The ETF issuer Direxion even warns investors that the ETF is not meant to accurately reflect the long-term gains or losses in the underlying index.

Hence, this is why SOXL is down 76% instead of trading in the negative, given the massive losses in the underlying index that should be multiplied thrice. Therefore, only sophisticated investors should trade SOXL as a hedge against their other positions to generate a daily return.

*This is not investment advice. Always do your due diligence before making investment decisions.

SOXL stock price.

SOXL stock price 15-06-2022
Source: Tradingiew

SOXL stock price is down by 76.14% in 2022 and could be much lower.