CBRG is strapping explosives onto CBRS

Have you guys heard of $Leverage Shares 2X Long CBRS Daily ETF(CBRG.US) this stock? Most likely not, because it has less than 600,000 shares in total float, with a trading volume of only $4.2 million on 5/20. However, its underlying asset, CBRS, has been a frequent headline in the past two weeks—it just IPOed on 5/14, was dubbed the "Next Nvidia" by analysts, Cathie Wood bought 100,000 shares on 5/20, and it was approved by S&P Fast Track on 5/19 for potential index inclusion. A super-hot new stock, paired with an extremely small 2X leveraged ETF—I think this is worth talking about specifically.

First, let's explain what $Cerebras(CBRS.US) is.

Cerebras Systems makes wafer-scale AI chips (Wafer-Scale Engine). Simply put, it turns an entire silicon wafer into a single chip. A regular NVIDIA GPU is cut from a small piece of the wafer and then packaged, while Cerebras doesn't cut it—it packages the entire wafer as a single chip, with an area 56 times larger than the NVDA H100 and 4 trillion transistors vs. NVDA's 80 billion. Its selling point is "AI inference speed 50-70 times faster than NVIDIA," and the market defines it as a "potential challenger to NVDA."

It IPOed on 5/14 at $350, closed at $311 on the first day (down 11%), and fell another 10% to $279.72 on the second day. It looked like a typical new stock breaking below its issue price—but it suddenly reversed on 5/19 because S&P listed it in the Fast Track channel (meaning it will be included in the index within weeks, forcing passive funds to buy). On 5/20, it was volatile again: pre-market was up 3.81%, early trading surged +10% to $338, but Jensen Huang commented that "chips like Groq will remain niche products long-term"—Groq and Cerebras are both new players in AI inference chips, and Huang's words indirectly hit all these newcomers. As a result, CBRS fell from a high of $338 to a low of $284, closing at $290.69, down 4.26%.

In just one day, CBRS itself experienced a 19% intraday swing. This is the "standard move" for a new IPO—the first 30 days see the most intense investor gamesmanship, with extremely high volatility.

What is $Leverage Shares 2X Long CBRS Daily ETF(CBRG.US) ? Its full name is Leverage Shares 2X Long CBRS Daily ETF, a 2X daily leveraged ETF for CBRS. It rebalances its holdings after each market close to maintain 2X leverage.

So how did CBRG perform on 5/20? Intraday high $17.15, low $12.40, closed at $12.78, down 8.52%—a single-day swing of 38%. CBRS itself swung 19%, and CBRG amplified it to 38% due to 2X leverage. If you bought at the high of $17.15 at 4 AM ET (9:30 AM Beijing time, US market open) and closed at $12.78 at 4 PM ET, your account would be down 25%.

Why do I say "strapping a bomb to CBRS"?

First, CBRS itself is a bomb. The first 30 days after a new IPO, plus ARK's successive hype, plus S&P index inclusion expectations, plus NVDA's Jensen Huang's bearish comments—bull and bear forces are extremely divided. For such a stock, daily ±10-20% swings are the norm, not the exception.

Second, leveraged ETFs on highly volatile assets amplify not just gains and losses but also path-dependent decay. As I explained in the LRCX/LRCU post a few days ago—if LRCX rises 10% one day and falls 10% the next, it's down 1% cumulatively, while the corresponding 2X leveraged ETF is down 4%. For a stock like CBRS with three times the volatility, the decay is also three times greater.

Third, CBRG has extremely low float. The total shares outstanding are listed as 0, but there is some actual float, with a single-day trading volume of only $4.21 million—any slightly larger order will send the price flying, with bid-ask spreads so wide it's unbelievable. Institutions won't touch this kind of stock; it's all retail traders.

So, what should I do if I want to bet on Cerebras? Old Xu's three trading tips:

First, don't use leveraged ETFs for the first 30 days after a new IPO. Volatility is too high; leverage and decay will eat into your directional gains. If you want to go long, buy CBRS shares directly, keeping the position under 1% of your total portfolio as an "AI computing power lottery ticket."

Second, if you really want to use CBRG, only do intraday trades. Buy in the morning, sell in the afternoon, absolutely no overnight holds. CBRS has the potential for a Gamma squeeze due to S&P inclusion expectations and ARK's continuous buying, so there's logic for intraday longs—but overnight decay will wipe out any directional gains.

Third, wait until the first 30 days after the IPO are over. Cerebras IPOed on 5/14; after 6/14, volatility usually converges to a 5-8% range. Only then does using 2X leverage make sense. Using it now = riding in a race car without a seatbelt.

Cerebras as a company has potential (wafer-scale AI inference chips are real technology), but whether to participate in this post-IPO hype wave depends on how strong your heart is. If you must participate, buy CBRS shares, don't touch CBRG—an extra +50% in leveraged gains isn't worth the cost of a few skipped heartbeats.