GraniteShares 2x Long BABA Daily ETF (BABX) Delivers +strong performance on Alibaba Rebound

Key Takeaways

• BABX surged approximately 45% over the last 30 days, reflecting amplified 2x daily leveraged exposure to a powerful rally in Alibaba Group Holding Limited (BABA) shares.
• Over the last quarter, BABX declined roughly 22%, illustrating the extreme volatility characteristic of single-stock leveraged ETFs and the steep drawdown BABA experienced earlier in the period.
• Primary catalysts include Alibaba's pre-earnings briefing revealing narrowing instant-commerce losses, accelerating cloud revenue growth, and the landmark regulatory approval for Apple Intelligence featuring Alibaba's Qwen AI model in China.
• Alibaba Cloud now commands an estimated 40% share of China's full-stack AI cloud market, while the company's Qwen3.8 Max large language model launch reinforced its position in the intensifying global AI race.
• As a 2x daily leveraged product, BABX is designed for short-term trading and is not suitable as a buy-and-hold investment due to the effects of daily compounding and volatility decay.

BABX Overview and Portfolio Exposure

The GraniteShares 2x Long BABA Daily ETF seeks daily investment results, before fees and expenses, of 2 times (200%) the daily percentage change in the American Depositary Receipt (ADR) of Alibaba Group Holding Limited (BABA). The fund is actively managed and uses financial instruments such as total return swaps and options, supplemented by direct purchases of the underlying stock, to achieve its leveraged objective. It is non-diversified and carries a net expense ratio of 1.15%.

Because BABX is a single-stock leveraged ETF, its portfolio is concentrated entirely on replicating leveraged daily exposure to Alibaba. Alibaba operates China's largest e-commerce ecosystem — spanning Taobao, Tmall, and international platforms — alongside Alibaba Cloud, Cainiao logistics, digital media, and a rapidly expanding artificial intelligence division. The company's cloud computing segment has become a principal growth engine, with AI-related products contributing an increasing share of external cloud revenue. This concentrated structure means BABX's performance is entirely dependent on BABA's daily price movements, magnified by the 2x leverage factor. When BABA rallies, BABX can deliver outsized gains; when BABA declines, losses are equally amplified. I also checked sector context using Tickeron’s AI Screener to compare the ETF against peers.

BABX Price Performance: Last 30 Days vs. Quarter

Over the last 30 days, BABX delivered an extraordinary gain of approximately 45%. The move was driven by a sharp recovery in Alibaba shares, which rose from around $98 in early July to over $116 by late July — a roughly 19% advance — that BABX's 2x daily leverage amplified significantly. The rally was not gradual; it was punctuated by a single-day surge on July 8 when BABA jumped more than 11% following an upbeat pre-earnings corporate update, producing a one-day BABX gain exceeding 20%.

In contrast, BABX declined roughly 22% over the last quarter. From late April through late June, Alibaba shares endured sustained selling pressure, dropping from the $130 range to a 52-week low near $92. Heavy AI-related capital expenditure, margin compression, a sluggish Chinese consumer environment, and geopolitical tensions all weighed on sentiment. BABX's leveraged structure amplified those declines, producing a drawdown far steeper than BABA's own 52-week decline. The recent 30-day rebound, while powerful, still leaves the ETF well below its levels from three months ago.

What Drove the Recent 30-Day Rally in BABX

The 30-day rally in BABX was fueled by a confluence of company-specific catalysts and a broader rotation into beaten-down Chinese technology stocks. On July 8, Alibaba held a pre-earnings briefing that revealed narrowing losses in its instant-commerce and on-demand delivery businesses alongside accelerating growth in its cloud computing division. Frost & Sullivan data cited in the briefing showed Alibaba Cloud holding a 40.1% share of China's full-stack AI cloud market — more than its next three competitors combined. BABA shares soared roughly 11% that day, and BABX surged more than 20% as the 2x leverage kicked in.

Days later, China's Cyberspace Administration formally approved Apple Intelligence for domestic use, confirming Alibaba's Qwen large language model would power text and image generation features across iOS, iPadOS, and macOS for users in China. The deal positions Alibaba at the center of Apple's AI experience in the world's largest smartphone market. Alibaba also unveiled a preview of its Qwen3.8 Max model, a 2.4-trillion-parameter system the company described as competitive with leading US frontier models. Additional support came from aggressive share buybacks, a federal judge's temporary pause of a Pentagon rule designating Alibaba as a Chinese military company, and growing analyst confidence — with consensus price targets suggesting substantial upside from mid-July levels.

Drivers Behind the Quarterly Decline in BABX

The sharp quarterly decline that preceded the 30-day rally reflected deeper structural concerns. Alibaba's adjusted EBITA (Earnings Before Interest, Taxes, and Amortization) plunged 84% year-over-year in the March quarter as heavy AI infrastructure spending and instant-commerce losses eroded profitability. Adjusted net income barely reached break-even. Free cash flow turned negative, and investors grew increasingly uneasy about the pace of capital expenditure without near-term revenue acceleration.

Macroeconomic headwinds compounded the pressure. China's consumer spending remained tepid, and expectations for large-scale government stimulus went unfulfilled. US-China technology tensions also escalated, with the Pentagon expanding its list of alleged Chinese military companies and Anthropic accusing operators linked to Alibaba's Qwen lab of unauthorized AI model distillation. The cumulative effect pushed BABA shares down roughly 28% during the quarter, and BABX's 2x daily leverage magnified that move into a decline of approximately 22%. The divergence between the 30-day and quarterly figures underscores both the high-beta nature of the underlying stock and the powerful compounding effects inherent in daily leveraged products.

BABX ETF Outlook: What Investors Should Watch Next

The trajectory of BABX over the coming months will depend almost entirely on Alibaba's stock performance and the persistence of the AI-driven sentiment shift. The most significant near-term event is Alibaba's fiscal first-quarter earnings report, expected in early September. Consensus estimates project earnings of approximately $2.44 per share, representing roughly 29% year-over-year growth. Cloud revenue growth, AI monetization progress, and updated guidance on instant-commerce losses will be closely scrutinized.

Beyond earnings, several macro and structural factors warrant attention. US-China relations remain a persistent risk, particularly given the ongoing Pentagon designation dispute and legislative interest in regulating Chinese AI model access. China's broader economic trajectory — including consumer confidence, property market stability, and potential fiscal stimulus — will influence Alibaba's core e-commerce business. On the competitive front, the intensifying AI model race with rivals such as Moonshot AI, Baidu, and ByteDance may pressure margins even as it validates Alibaba's full-stack AI strategy. For BABX specifically, investors must remain mindful of the product's daily reset mechanism: while the 2x leverage can generate dramatic gains during sustained directional moves, volatility and daily compounding can produce returns that diverge significantly from 2x the underlying stock's return over periods longer than a single trading session. From what I see, monitoring these factors closely remains essential.

Using Tickeron’s AI Tools for ETF Analysis

In my research, I often rely on Tickeron’s AI Screener to quickly identify leveraged ETFs showing strong momentum or sector rotations. The platform lets me apply technical indicators, volatility filters, and AI signals across thousands of securities, which helped surface BABX’s recent move alongside comparable instruments. It provides a structured way to compare performance patterns without manual scanning of every data point.

Disclaimer

The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.

Disclaimers and Limitations

Contributor

Jimmy Landsman|Expert

My name is Jimmy, and I’m a financial analyst focused on identifying compelling opportunities across the ETF market. Each day, I analyze hundreds of ETFs to uncover potential trading and investment opportunities using a broad range of market factors. For short-term trading, I rely heavily on technical analysis, including price channels, momentum indicators, support and resistance levels, trend patterns, and other market signals. At the same time, I dedicate significant attention to evaluating ETFs from a long-term investment perspective. My objective is to build a well-balanced ETF portfolio that combines core investment holdings with more tactical and speculative positions. The goal is to create a portfolio that can participate effectively in market rallies while also remaining resilient during periods of volatility and market corrections.

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