Webull Corporation’s (NASDAQ:BULL) stock plummeted more than 20% on Wednesday after a bipartisan House committee raised national security concerns over the brokerage’s ties to China. But for investors watching the rapidly expanding leveraged ETF market, an even sharper move is unfolding in an ETF designed to amplify Webull’s daily returns.
The Leverage Shares 2X Long BULL Daily ETF (NASDAQ:BULG), which seeks to deliver twice the daily performance of Webull stock before fees and expenses, fell sharply on Wednesday as BULL shares came under pressure. At one point, BULG traded as low as $17.79, a 48% plunge. Its volume also surged to roughly 233,610 shares, versus an average of about 6,057.
That means Wednesday’s selloff was not simply another bad day for a leveraged ETF. It offered a real-time example of how quickly losses can compound when leverage is applied to an already volatile single stock.
Why Webull Stock Is Falling
A House China committee report alleged Wednesday that Webull has ties to the Chinese government through its ownership, workforce, technology and data infrastructure, while raising concerns over customer cash and U.S. investor data. Webull has disputed the congressional findings.
BULL fell more than 20% during Wednesday’s session after trading as much as roughly 30% lower in premarket action.
BULG Magnifies the Webull Selloff
BULG is specifically designed to magnify BULL’s daily return by two times. That distinction is crucial. The fund resets its exposure every trading day. The returns over longer periods therefore depend on the sequence of daily moves and the effect of compounding.
That creates a particularly dangerous combination when the underlying stock is experiencing extreme volatility. Investors can lose money even when the underlying stock rises over a period longer than one day. The fund prospectus states that an investor could lose the entire principal in a single day if BULL falls by more than 50%.
The performance already illustrates the risk. The ETF has experienced significant volatility over the past year, with a 52-week range spanning from $18.36 to $257.00, indicating a potential for both high risk and reward, according to Benzinga Pro data.
BULG’s 0.75% expense ratio and 2X daily objective make it a product designed for investors who understand and actively monitor leveraged exposure, rather than a conventional buy-and-hold ETF.
Photo: PJ McDonnell on Shutterstock
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