Category: 3. Business

NEW YORK — NEW YORK (AP) — If someone left a government job with a black eye, literally, ran a company with shrinking profits, and suddenly had federal investigators crawling over their business, you might say they’re having a bad year.

But most people are not Elon Musk.

The world’s richest man has only gotten richer this year and shareholders at Tesla, his electric car company, may make him wealthier yet by approving a trillion-dollar pay package in a bet he will succeed with new plans for a “robot army” and other technological breakthroughs even as some past promises remain unfulfilled.

“The genius of Elon Musk is keeping investors focused on what the company might look in like 5 or 10 years — while ignoring very near-term challenges,” marvels Garrett Nelson of CFRA Research. Or put more bluntly by Zacks Investment’s Brian Mulberry, “Your average CEO would likely not survive this.”

Musk started out the year with a side hustle — promising to cut $2 trillion in government spending as head of President Donald Trump’s Department of Government Efficiency, before cutting that pledge in half. In the end, DOGE posted only $240 billion in savings, according to its own notoriously unreliable estimates, and it’s not even clear those savings will hold as the Trump administration scrambles to refill many essential jobs DOGE cut that it shouldn’t have.

“There is a pattern of them announcing great big firings, and then turning about and saying, ’No, that’s a mistake,’” said Elaine Kamarck, a Brookings Institute senior fellow who has compiled a list of 17,000 positions being refilled. “They cut without a plan, without regard to function.”

Musk used the same slash-and-burn tactics after he took over Twitter and evidence of that backfiring has emerged this year, too.

In the past two months, he’s settled a pair of lawsuits filed by 2,000 former Twitter employees and executives alleging that they were pushed out under false pretenses or never given severance as promised. The amount the ex-workers got was undisclosed, but if they received even a fraction of the combined $628 million they were demanding, the cost will cut deeply for a company whose advertising has plunged since his takeover.

More bad news for Musk came Wednesday when Tesla announced earnings had plunged 37% in the third quarter. Vehicle sales rose 6% as customers rushed to take advantage of a federal tax credit before it expired last month, but the figure for the full year is expected to drop significantly as car buyers turned off by Musk’s right-wing political stances have boycotted the business.

This time a year ago Musk was telling investors sales could grow 20% to 30%.

The stock fell earlier this year as the bad news piled up. But after Musk appeared in the Oval Office in May for his farewell to DOGE sporting a shiner, it has doubled and is now posting a year-to-date gain of nearly 9% after the close of regular trading Wednesday. His net worth has also jumped — up $62 billion this year to $483 billion, according to Forbes magazine.

Investors are mostly buying Musk’s line that plunging car sales don’t matter as much now because the future of the company lies more with his new driverless robotaxis service, the energy storage business and building robots for the home and factory. To make his task worth while, Tesla’s directors are asking shareholders to sign off on his enormous new pay package at an annual meeting next month.

But there are big questions surrounding these endeavors, particularly the driverless cabs.

Musk’s robotaxis, which began picking up passengers in Austin, Texas, and San Francisco this summer, can’t yet be called driverless because they still require “safety monitors” who are ready to seize control in case something goes wrong, which occasionally happens. One of them drove down the opposing lane, for example.

The robotaxi plans need approval from regulators in various states even as the ones in Washington have swarmed the company.

They’ve opened four investigations into Tesla so far this year, including one into why it hasn’t reported accidents involving its self-driving software quickly to the government as required. Another launched earlier this month is looking into dozens of reported accidents in which Teslas using self-driving software ran red lights and broke other traffic rules, occasionally crashing into other vehicles and causing injuries.

Musk has disappointed before, talking big and missing deadlines repeatedly, only to deliver for shareholders eventually. Tesla investors who held on through a tough 2018 as the company struggled to produce its Model 3 vehicle at a profit, eventually saw their stock soar as sales jumped.

One money manager who rode that earlier surge then bought again earlier this year, says she’s confident Musk’s magic is still there and he can pull off the seemingly impossible again.

“He frequently teeters on the edge of disaster,” said Nancy Tengler in a statement, “and then pulls back just in the nick of time.”

One difference now is most other Tesla investors also believe this and have bought up the stock, leaving little room for error.

Shares of U.S. companies in the S&P 500 index are valued at 24 times what investors expect them to earn next year. By contrast, Tesla is trading at 250 times expected profits, enough to make you believe that Musk, instead of having a very bad year is having a spectacular one.

DURBAN, South Africa — A top executive at Africa’s biggest drug company shared a few home truths with the continent’s health policymakers about the obstacles to local manufacturing at the Conference on Public Health in Africa (CPHIA) 2025.

Aspen Pharmacare’s Dr Stavros Nicolaou blamed regulatory bottlenecks and procurement policies for the failure of drug manufacturers on the continent to realise their potential.

“It is unacceptable for African manufacturers to undergo a six-year [qualification] process before you get to market. We can do this in half the time,” he told a conference plenary session on local manufacturing on Thursday.

He is both Aspen’s group senior executive for strategic trade and chair of the industry body, the Pharmaceutical Manufacturers in South Africa.

It is a myth that African manufacturers are uncompetitive, added Nicolaou. For example, Aspen is active in 55 markets, reaches patients in over 150 countries, and is the global leading supplier of generic anaesthetics outside of the US.

Shift procurement

Nicolaou called for a shift in multilateral procurement, including by Gavi, UNICEF and the Global Fund to Fight Aids, Tuberculosis and Malaria.

He told delegates that the establishment last year of the African Vaccine Manufacturing Accelerator (AVMA) was “a start”, but that the accelerator is “not fit for purpose” in its present form.

AVMA is a financing mechanism set up to raise $1.2 billion for manufacturers over 10 years. Nicolaou told Health Policy Watch that this amount  – earmarked for “fill-and-finish” drug manufacturers – was rather modest. 

He feels that there is insufficient incentive to spur the growth of the sector, upon which the future expansion of the medical products value chain depends.

“We can’t have African solutions compiled elsewhere and imposed on Africa. It won’t work.”

Pooled procurement of vaccines, therapeutics and diagnostics must be established “with speed”, he said.

‘Nothing has happened’

Nicolaou noted that more than four years had passed and “nothing” had happened since the African Union and the Africa Centres for Disease Control and Prevention (Africa CDC) announced their ambition to ensure the continent manufactures 60% of its vaccine needs by 2040. 

The AVMA launch came in the wake of the COVID-19 pandemic, which exposed the continent’s 99% reliance on foreign vaccine manufacturers and how its urgent needs were relegated to the back of the world procurement queue.

Nicolaou also responded to comments by South Africa’s Minister of Science, Technology and Innovation, Dr Blade Nzimande, who gave the session’s keynote address.

Nzimande called for efforts to “build sovereign capacity” in R&D, science and technology, including across the “whole health manufacturing value chain…  be it therapeutic, diagnostic or vaccines we need for our continent”.

He described as “historic” the 60% by 2040 plan to develop tools to secure the continent’s health. He sketched how the initiative sought to expand capacity, implement health standards, and harmonise regulations — all themes elaborated on by other speakers and panellists at the session.

Nzimande toasted the initiative with a glass of water while at the lectern, encouraging his audience to join with applause.

“Government has an important role to play by acquiring locally produced therapeutics, diagnostics and vaccines,” he said.

Serial importer

Nicolaou said he was disappointed that Africa had the highest disease burden yet remained a serial importer and “every year the trade deficit in pharmaceuticals grows”.

South Africa and Egypt have the continent’s largest pharmaceutical markets.

“If you’re talking about security of supply for the continent, South Africa is immensely important. Charity starts at home in that we need to fix our own [national] procurement legislation first,” he said.

“Most of the volumes are procured via the state, and yet we continue to be a serial importer of pharmaceutical products in South Africa. The market is valued at R70-billion (manufacturers’ exit price)… and our trade deficit is more than 50% or around R39-billion.”

There was big potential for local production, yet South Africa continued to import high-volume products like antiretrovirals and vaccines, putting the brakes on local manufacturing development.

“There’s a heavy weighting towards importers, and we now have the data,” he said, citing customs figures, including information on imports from India.

Import reliance

“It demonstrates the extent of the problem. So we import significant and vast sums of our antiretrovirals. We have the largest HIV population of any country in the world; 17% of the world’s HIV population; there are about eight million infected people; about 6.6 million on treatment; and yet we continue to import most of our antiretrovirals.”

These imports were growing every year and, apart from antiretrovirals, included other high-volume products such as vaccines, TB medicines, and insulins.

He said this was despite local companies often being price competitive or representing “best value”: an opportunity to grow the local economy through the multiplier effect.

He proposed a three-point plan to remedy matters. First, the introduction of a priority review and parallel submission to expedite the licensing of medicines. The review of drugs by the national regulator should happen at the same time as the World Health Organisation’s review, instead of sequentially, which can add two to three years of costly delays.

Second, increase Gavi subsidies for the local production of vaccines to stimulate the market.

Third, establish a pool for procurement for the entire continent — as was successfully done during COVID-19 — to unlock economies of scale.

Also addressing the plenary, Nhlanhla Msomi, president of AfricaBio, called for a compact with the manufacturing industry to localise innovation.

However, Nicolaou said that it was premature to expect expansion of the value chain.

It was first necessary to support African manufacturers with fill-and-finish products to allow them to develop capacity and grow volume.  In time, they could then invest in extending the value chain.

“Unless you start getting orders and you start succeeding in fill-and-finish first, companies are not going to backwardly integrate into drug [active] substance development,” he said.

Nicolaou said progress was not happening fast enough, and this was sapping momentum to achieve the “60% by 2040” aim.

“There’s a domestic issue to sort out, and then a continent,” he said.

Also at the plenary session, Dr Serge Blaise Emaleu, a global and public health and infectious diseases expert, said sustainable development could shift Africa from being an epicentre of disease to the centre of innovation.

Local manufacture was the “backbone of a sovereign health ecosystem”, but he cautioned that the commitment by African leaders to promote manufacture and invest in research “must be backed by financing” and that governance and leadership were required, and these things must be “moving in lockstep”.

Emaleu identified five interconnected pillars upon which Africa’s R&D self-reliance must be built: linking science to production; funding for research and development; investing in human resources; *building infrastructure and technology, and finally a regulatory framework to safeguard and sustain momentum.

Image Credits: Africa CDC, Rwanda Ministry of Health.

Sensor specialist HENSOLDT is adjusting its guidance for the 2025 financial year following recent and further foreseeable order intake. The company now expects a significantly increased book-to-bill ratio of 1.6x to 1.9x, whereas previous expectations were approximately 1.2x. In addition, the expected revenue is specified at approximately 2,500 million euro (previously: range of 2,500–2,600 million Euro) and the adjusted EBITDA margin at 18% or higher (previously: approximately 18%). At the same time, the company confirms its medium-term guidance and revenue ambition for 2030.

Following the German government’s decision to initiate further procurement in numerous defence programmes due to the continuing high threat level, this is now increasingly reflected in concrete orders. With its solutions meeting current and future security requirements, HENSOLDT is benefiting considerably from this. As a result, the recent orders will push the book-to-bill ratio for 2025 above the previously expected 1.2x.

The increasing order intake also comes with a clear mandate: industrial scaling of its programmes remains a top priority for HENSOLDT. The company is expanding its capacities through automation measures, a new logistics centre and a new building in Oberkochen. In addition, comprehensive transformation initiatives in the areas of operations, engineering and supply chain are driving efficiency, flexibility and resilience. Despite the high complexity of the ramp-up, HENSOLDT is well on track here. At the same time, profitability remains secure: the specification in the EBITDA margin clearly shows that HENSOLDT is capable of efficiently execute the increased orders and operate successfully in economic terms.

Oliver Dörre, CEO of HENSOLDT, explains: “The fact that Germany is investing strongly in its own security due to the current security situation and that this political will is now being reflected in concrete orders is an important step towards genuine defence capability. Thanks to innovative technologies and the consistent expansion of our industrial capacity, we are well positioned to make an important contribution to this. This demonstrates HENSOLDT’s ability to reliably deliver complex products and solutions even in the face of significantly increasing demand.”

Christian Ladurner, CFO of HENSOLDT, says: “The raise of our book-to-bill ratio and the specification of the adjusted EBITDA margin shows that HENSOLDT is not only growing but also continuing to operate profitably. Through targeted investments in capacity and processes, we are securing our delivery capability and sustainable growth. At the same time, our company’s operational strength forms the basis for consistently implementing our strategic priorities.”

By William Gavin

Redwood Materials plans to meet the AI-fueled demand for energy with recycled electric-car batteries

J.B. Straubel is a former Tesla executive who left to focus on his energy startup, Redwood Materials.

The battery-recycling company founded by an ex-Tesla Inc. executive can count a high-profile artificial-intelligence company among investors in its latest funding round.

Redwood Materials said Thursday it had raised $350 million in a round led by the venture-capital firm Eclipse and Nvidia Corp.’s (NVDA) venture-capital arm, NVentures. Nvidia’s contribution to the round was not disclosed, and a representative did not immediately return a request for comment.

The fundraise comes as major AI players are scrambling to meet their power needs and as the U.S. is facing difficulties building out domestic mineral-supply chains. Currently, China is – by far – the dominant force in the global supply chains for cobalt, nickel and other minerals. And rising tensions between China and the U.S. have stoked worries that some companies, including carmakers, may get cut off from lithium-ion batteries and battery materials.

Don’t miss: Quantum stocks are rising. Why they may be the Trump White House’s next investment.

“This is a pivotal time for both Redwood and the United States, as curtailment in international supplies overlaps with intense domestic demand growth for these same materials and energy products,” the company said in a statement.

Redwood said it would use the new cash to expand its growing energy-storage business, which it launched in June under the name Redwood Energy and which seeks to meet the quickly escalating demand for energy needed for AI data centers. By 2030, global power demand from data centers is set to grow 165% compared with 2023, according to Goldman Sachs.

“AI is several things. AI is energy, AI is chips, the models and the application,” Nvidia CEO Jensen Huang said in a recent interview with CNBC’s “Squawk Box.” “And we need more energy.”

Redwood believes it already has the supply chains necessary to match its ambitions. The company has said it receives batteries equivalent to 250,000 electric vehicles annually, or about 90% of all lithium-ion batteries and battery materials recycled in North America.

Redwood’s core business involves recycling scrap from consumer electronics and batteries, extracting minerals like cobalt and nickel and selling those components back to partners and battery suppliers, including Toyota Motor Corp (JP:7203).

Now it says it won’t take battery packs apart immediately, instead diverting what power remains to fuel low-cost, large-scale energy-storage systems. Once that energy is fully drained, the batteries are sent to be scrapped for parts as usual.

“Low-cost, large-scale battery energy storage has emerged as the most immediate and scalable solution to enable AI factory deployment and unlock stranded grid and generation capacity,” Redwood said in a statement.

Redwood was founded in 2017 by J.B. Straubel, a Tesla (TSLA) co-founder and executive who left the company to scale his startup. Straubel’s former employer is also seeking to meet growing energy demand.

See more: This underrated Tesla business deserves more attention – and it’s not AI

Beyond expanding its energy business, Redwood said it will also use the new capital to expand its refining and material-production capacity and build out its engineering and operations teams. The company was valued at $1 billion in late 2023, following its previous fundraising round, according to TechCrunch.

-William Gavin

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

  (END) Dow Jones Newswires

  10-23-25 1400ET
Copyright (c) 2025 Dow Jones & Company, Inc.

Sign up here.

The CAT ruled that Apple had abused its dominant position from October 2015 until the end of 2020 by shutting out competition in the app distribution market and by “charging excessive and unfair prices” as commission to developers.

Apple – which has faced mounting pressure from regulators in the U.S. and Europe over the fees it charges developers – said it would appeal against the ruling, which it said “takes a flawed view of the thriving and competitive app economy”.

The case had been valued at around 1.5 billion pounds ($2 billion) by those who brought it. A hearing next month will decide how damages are calculated and Apple’s application for permission to appeal.

LANDMARK MASS LAWSUIT

Rachael Kent, the British academic who brought the case, argued Apple had made “exorbitant profits” by excluding all competition for the distribution of apps and in-app purchases.

Her lawyers argued at the start of the trial in January that Apple’s “100% monopoly position” allowed it to impose restrictive terms and excessive commissions on app developers, which Apple denied.

The CAT said in its ruling that developers were overcharged by the difference between a 17.5% commission for app purchases and the commission Apple charged, which Kent’s lawyers said was usually 30%. The CAT also ruled that app developers passed on 50% of the overcharge to consumers.

“This ruling overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to discover apps and securely make payments,” an Apple spokesperson said.

BOOST FOR UK’S ‘CLASS ACTION’ REGIME

The case was the first mass lawsuit against a tech giant to come to trial under Britain’s fledgling class action-style regime, which this year reached its 10th anniversary and has seen several multi-billion-pound cases certified for trial but with limited success for consumers so far.

Fellow tech giants including Amazon and Microsoft are also facing sizeable claims at the CAT.

Kent said in a statement that the ruling shows Britain’s collective action regime is working and “sends a clear message: no company, however wealthy or powerful, is above the law”.

($1 = 0.7451 pounds)

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Calvin Klein Inc. today announces the U.S. launch of Re-Calvin, a new take-back program designed to make it easy for customers to responsibly part with their pre-loved items.

Developed in partnership with Trove, the leader in branded resale and customer trade-in, and Debrand, a comprehensive sortation and circular logistics partner, Re-Calvin is a free service from Calvin Klein that gives U.S. customers a simple, accessible way to extend the useful life of clothing, shoes and accessories from any brand through donation, recycling, downcycling or, when necessary, responsible disposal that is converted from waste to energy. Re-Calvin also accepts intimates such as bras, swimwear and underwear – a category often excluded from circularity programs.

“As Calvin Klein continues its sustainability journey, we are proud to introduce a program that makes circularity more accessible for our customers and delivers alternative uses for pre-loved items,” said David Savman, Global Brand President, Calvin Klein. “It was important that we partner with experts with a proven ability to build and scale programs that handle a wide range of products andcategories, making it easier than ever for customers to responsibly extend the life of their items.”

How It Works

Customers in the United States can visit calvinklein.us/re-calvin to print a free shipping label and send in items from any brand. Once received, each package is processed and routed according to Calvin Klein’s diligent, established standards:

• Reuse: Items in good condition are donated or sent to secondhand distribution partners.

• Recycle / Downcycle: Items that cannot be reused, including intimates, are recycled into new fibers whenever possible, or downcycled into materials such as insulation or padding.

• Responsible Disposal: As a final step, if no reuse, recycling or downcycling option is available, items are to be converted from waste to energy or alternative fuel conversion.

Only items suitable for a new owner are directed to reuse. Garments with significant wear, damage, heavy stains and all intimates are directed to end-of-use streams, including recycling, downcycling and responsible disposal. Customers receive an email update after their parcel is processed, detailing how their items were routed, ensuring transparency throughout the process.

Powered by Trove’s Takeback Plug-In

Re-Calvin is powered by Trove’s new Takeback Plug-In, which enables Calvin Klein to seamlessly manage item intake, routing and transparency at scale. The plug-in integrates directly into Calvin Klein’s existing U.S. website, enabling the brand to operate a multi-brand takeback program that includes complex categories such as intimates.

The Takeback Plug-in expands Trove’s suite of circular solutions, which also includes the Resale Plug-in, Trade-in Plug-in and a range of API integration options. Together, these tools give brands the flexibility to build customized circular programs that meet their unique needs.

“Re-Calvin marks the first implementation of Trove’s new Takeback Plug-In,” said Terry Boyle, CEO of Trove. “With this launch, Calvin Klein is showing how technology can make responsible choices simple for every customer, accepting items from any brand and across all categories, including intimates, to help keep more textiles in circulation.”

By accepting items from any brand and across all categories, Re-Calvin reflects Calvin Klein, Trove and Debrand’s shared belief that every item should have as many chances as possible to find a second life.

An autistic man who was let go as an unpaid shelf stacker at a Waitrose supermarket despite volunteering there for years has been offered a job at Asda.

Tom Boyd, 28, had worked in the Cheadle Hulme Waitrose store since 2021 with a support worker, as his mother, Frances Boyd, said the role gave her son “a sense of purpose and belonging”.

In a Facebook post last Friday, she wrote that her “autistic son has been treated so unfairly, and we feel deeply let down” by Waitrose. She said the supermarket declined to give him a paid job despite him offering more than 600 hours to the store “purely because he wanted to belong, contribute, and make a difference”, and that he was a well-liked member of the team by his co-workers.

Boyd added that they had only asked for a few hours of paid work “not as charity, but as recognition for all the time, effort, and heart” Tom had given to the store, and that she and her family were “shocked by how dismissive and cold” the management’s response was, and that Tom was asked not to return.

The post also claimed that Waitrose had not made any reasonable adjustments for Tom, who has limited communication skills, despite it being mandated by the Equality Act 2010, and that he received “no apology, no thanks, and no recognition for his commitment. Just silence.”

The post led to an outpouring of support for Tom, with Boyd telling the BBC on Thursday that she had been “overwhelmed” by people’s responses and that her son had been offered a job by another supermarket.

“We’ve had some great news – Asda have offered him two five-hour paid shifts a week,” Boyd said. “It’s overwhelming and they are flexible to say if at any time he is struggling they are fine. How amazing that a company could do this.”

As well as support, Boyd’s Facebook post also led to intense criticism being directed towards Waitrose for its handling of the situation, with some customers claiming on social media that they would no longer visit the store.

The mayor of Greater Manchester, Andy Burnham, decried the company’s “truly terrible” treatment of Tom in a post on X.

After the backlash, Waitrose offered Boyd his job back in a paid capacity, but it is understood this offer was declined.

Burnham also pledged to support Boyd and others like him, saying that the Greater Manchester Combined Authority “would encourage all employers, including Waitrose, to sign up to our brand new Bee Neuroinclusive code of practice”, a guide for how companies should support neurodivergent employees. He offered Boyd’s mother the chance to be an ambassador for campaign, which she accepted.

Speaking on Wednesday, a Waitrose spokesperson said the company was “well experienced in making reasonable adjustments to help people succeed at work”, adding: “We are sorry to hear of Tom’s story and whilst we cannot comment on individual cases, we are investigating as a priority.”

A spokesperson for Asda said the company “has a supported internship programme and partnership with DFN Project Search – a national charity for young people with autism or a learning disability – through which we have welcomed over 30 talented new colleagues into roles across our stores”.

“We have seen the positive impact this has for the individuals who join and for our colleagues and customers too. So when we heard about Tom and his desire to find meaningful work, we knew he’d be a fantastic fit and we are delighted to offer him a role at his local store,” they added.

By Joseph Adinolfi

A trio of issuers filed with the SEC this month for permission to launch dozens of new leveraged funds, some offering to amplify daily returns of hot stocks like Nvidia by as much as 5 times

Over the past few weeks, at least three ETF issuers sought permission from the SEC to launch new leveraged funds. Some say the prospects push the boundaries of what might be permitted under existing regulations.

Wall Street’s push to launch ever-riskier leveraged exchange-traded funds is picking up steam, as issuers test the boundaries of what is legally permissible in the U.S. with a recent flurry of filings.

Over the past few weeks, at least three ETF issuers – Volatility Shares, ProShares and T-Rex – have sought permission from the Securities and Exchange Commission to launch new leveraged funds. If approved, these products would offer investors the opportunity to magnify daily swings in the Dow Jones Industrial Average DJIA; shares of artificial-intelligence darlings Nvidia Corp. (NVDA) and CoreWeave (CRWV); and cryptocurrencies, including bitcoin (BTCUSD) and XRP, by as much as 5x.

Many of the filings pitched funds that aim to amplify daily moves by 3x. But Volatility Shares has filed for permission to launch at least 21 funds advertising 5x daily swings on a number of individual stocks, cryptocurrencies, stock-market indexes or existing ETFs.

Representatives for Volatility Shares, ProShares and T-Rex all declined to comment on the filings when contacted by MarketWatch.

Since the beginning of October, issuers have filed for permission to launch more than 100 funds targeting 3x or 5x leverage, according to a MarketWatch analysis of securities filings.

Volatility Shares files for 21 5x levered ETFs

      Fund name                  Target                    Issuer        Date of filing 
   5x AMD ETF      Advanced Micro Devices Inc.       Volatility Shares  10/14/2025 
   5x AMZN ETF     Amazon.com Inc.                   Volatility Shares  10/14/2025 
   5x COIN ETF     Coinbase Global Inc.              Volatility Shares  10/14/2025 
   5x CRCL ETF     Circle Internet Group Inc.        Volatility Shares  10/14/2025 
   5x GOOGL ETF    Alphabet Inc. Class A             Volatility Shares  10/14/2025 
   5x MSTR ETF     Strategy Inc.                     Volatility Shares  10/14/2025 
   5x NVDA ETF     Nvidia Corp.                      Volatility Shares  10/14/2025 
   5x PLTR ETF     Palantir Technologies Inc.        Volatility Shares  10/14/2025 
   5x TSLA ETF     Tesla Inc.                        Volatility Shares  10/14/2025 
   5x Bitcoin ETF  Bitcoin                           Volatility Shares  10/14/2025 
   5x Ether ETF    Ethereum                          Volatility Shares  10/14/2025 
   5x Solana ETF   Solana                            Volatility Shares  10/14/2025 
   5x XRP ETF      XRP                               Volatility Shares  10/14/2025 
   5x GDX ETF      VanEck Gold Miners ETF            Volatility Shares  10/21/2025 
   5x GLD ETF      SPDR Gold Shares                  Volatility Shares  10/21/2025 
   5x MAGS ETF     Roundhill Magnificent Seven ETF   Volatility Shares  10/21/2025 
   5x SLV ETF      iShares Silver Trust              Volatility Shares  10/21/2025 
   5x SOXQ ETF     Invesco PHLX Semiconductor ETF    Volatility Shares  10/21/2025 
   5x SPY ETF      SPDR S&P 500 ETF Trust            Volatility Shares  10/16/2025 
   5x QQQ ETF      Invesco QQQ Trust Series I        Volatility Shares  10/16/2025 
   5x IWM ETF      iShares Russell 2000 ETF          Volatility Shares  10/16/2025 
   Source: SEC 

These filings caught the attention of individuals who closely follow the ETF industry. Some questioned whether these products would comply with current SEC regulations or run afoul of the regulator’s restrictions.

That’s because SEC regulations from 2021 include provisions that can effectively limit how much leverage a mutual fund or ETF can achieve using derivatives. The specific rule, known as 18f-4, states that firms must carefully manage how volatile their derivatives holdings might be – inclusive of swaps, futures or written options contracts.

Derivatives holdings are subject to a common risk-management calculation that compares their risk of loss to an underlying benchmark, said Rahul Sen Sharma, president and co-CEO of Indxx, which provides benchmarking services for ETFs that uses derivatives.

“Our understanding of 18f-4 is that it requires a designated reference portfolio to calculate a value at risk amount,” he told MarketWatch. While he called the rule “kind of long and complicated,” he figured it can be satisfied if a benchmark is provided – at least when it comes to 2x single-stock products, which have been approved in the past.

The first single-stock leveraged ETFs to trade in the U.S. launched in 2022, according to data from Morningstar Direct.

Dozens of funds aimed at 3x the daily move in an underlying index were grandfathered in because they launched before the 18f-4 SEC rule was finalized. That includes the ProShares UltraPro QQQ ETF TQQQ, which aims to amplify daily swings in the Nasdaq-100 index NDX. That fund consistently ranks among the most heavily traded by clients of Interactive Brokers Group Inc. (IBKR), according to data shared with MarketWatch.

Of note, in the U.S., no ETF currently trading targets 3x the daily move on an individual stock. A spokesperson for the SEC said the agency isn’t able to respond to many press inquiries due to the ongoing government shutdown.

The higher the targeted leverage, the greater the challenge for getting these funds to pass muster with the SEC, said Dave Nadig, president and head of research at ETF.com and co-author of book titled “A Comprehensive Guide to Exchange-Traded Funds.” However, SEC rules governing derivative-linked volatility could probably be gamed to a certain extent, he said.

Others were more upbeat about the possibility that the SEC could permit the new batch of proposed funds to come to market, including the ones targeting 5x leverage.

A top executive at one ETF issuer, who asked for anonymity because he was not authorized to speak publicly to the press, said he thinks these funds could be allowed under current SEC rules. Ultimately, whether or not they are approved will depend on how deeply opposed the SEC is to allowing these products to come to market, the executive said.

“Remember what happened with spot bitcoin? It wasn’t allowed, everyone filed for it, now it’s huge,” the executive said. In 2024, after a years-long saga, the SEC finally approved ETFs that could hold bitcoin directly.

Booming issuance

Issuance of new ETFs has boomed over the past couple of years as companies gravitated toward increasingly complex products. Funds that use derivatives, either to supercharge daily swings or offer dividend income or downside protection, have proven particularly popular.

Leveraged equity funds are the largest category in the leveraged-fund universe, encompassing 750 funds and $164.37 billion in total assets, according to data from EPFR, an ISI Markets company. The number of existing leveraged equity funds has increased by 40% year to date, and the vast majority of funds in the leveraged-equity category are ETFs.

Firms have also launched 164 leveraged alternative funds, which track cryptocurrencies like bitcoin and commodities like gold. These have accumulated $46 billion in assets, while leveraged bond funds have taken in $7.6 billion across 56 funds, EPFR data showed. These figures include both ETFs and mutual funds.

In the U.S., leveraged funds can be purchased on Robinhood Markets Inc. (HOOD) and other brokerages popular with individual investors, making them particularly popular with amateur speculators, experts said. Professional investors can trade them as well.

European regulators, so far, have demonstrated a higher tolerance than their U.S. counterparts for allowing leveraged products that everyday investors can tap. While some products tied to individual stocks have proven popular, one such fund went bust earlier this month, offering a lesson to investors.

On Oct. 6, the GraniteShares 3x Short AMD Daily ETP was terminated by its issuer after shares of AMD rose by more than 33% intraday, driving the value of the exchange-traded product to zero. This fund was what is known as an inverse fund. Seen as a sibling to leveraged funds, inverse funds aim to profit when the targeted asset or index declines in value. A 33% gain for a given stock would be large enough to wipe out a 3x inverse fund.

In a statement shared with MarketWatch, GraniteShares described the liquidation as a “standard outcome.”

“The closure of a 3x long or short ETF following an extreme price move is a standard outcome in both U.K. and U.S. markets. In this instance, a 33%+ intraday move in AMD triggered the predefined mechanism that results in a 100% loss for a 3x short position, exactly how the product is designed to operate,” a representative for GraniteShares said in a written statement to MarketWatch. Investors who owned the fund ahead of the wipeout lost their entire investment.

Liquidations like that one could follow in the U.S. if any or all of the current crop of filings for single-stock leveraged funds are approved, according to Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence.

Balchunas crunched the numbers and found 350 instances over the past five years where one of 66 stocks included in a filing for a 3x leveraged product swung by 33% or more in a single session. Such a move could be large enough to wipe out a fund aiming to amplify a daily move by 3x in either direction. A drop of just 20% would be enough to push a fund targeting 5x leverage on a single stock to liquidate.

Despite these risks, ETF.com’s Nadig said products targeting 5x leverage on stocks like Nvidia would probably prove popular with investors.

(MORE TO FOLLOW) Dow Jones Newswires

10-23-25 1321ET

Copyright (c) 2025 Dow Jones & Company, Inc.