DPST: Euphoria Turns To Despair In A Mere 6 Months

2025-04-12 20:46:28 ET

Summary

• DPST seeks to deliver 300% (3x) the return of the S&P Regional Banks Select Industry Index.
• DPST surged in value on the back of deregulation and tax cut expectations, but recent U.S. economic uncertainty has sapped investor enthusiasm.
• Regional bank forward P/E ratios are the lowest in the last six months, offering a wide margin of safety relative to U.S. financials.
• I explain why 2025 earnings may miss expectations, as well as factors that should boost performance in 2026.
• Key risks to consider include significant near-term losses and elevated credit provisions in Q1-Q2 2025.

Introduction

November 2024. The Direxion Daily Regional Banks Bull 3X Shares ETF ( DPST ) has just surged by ~40% in a single month following the U.S. presidential election, with investors expecting tax cuts and deregulation to boost regional bank performance....

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