Tesla and SpaceX Lose $456 Billion as Democratic Victories Raise Threat of Investigations
Elon Musk’s business empire has suffered a staggering decline in market value following Tuesday’s midterm elections, with Tesla and SpaceX losing approximately $456 billion combined by Thursday’s close as investors reacted to Democratic victories in Congress and the possibility of tougher government oversight of the billionaire’s companies.
The selloff intensified Thursday, when SpaceX shares fell approximately 9% and Tesla dropped roughly 11% during afternoon trading. The declines came amid a broader retreat in technology stocks, but analysts pointed to the election results as an additional source of concern for investors in Musk’s businesses.
Democrats captured both the House and Senate, giving them new opportunities to investigate Musk’s companies, examine their government contracts, and pursue legislation imposing additional restrictions on their operations.
Musk had invested heavily in preventing that outcome. According to figures first reported by the Financial Times, he contributed more than $470 million to Republican candidates and political organizations during the election cycle, making him the party’s largest financial supporter. Despite that spending, many of the candidates he backed were defeated.
The Democratic gains extended into Texas, the home state of both Tesla and SpaceX, where two prominent Republican allies of Musk lost major races.
Democrat James Talarico defeated Republican Attorney General Ken Paxton in the U.S. Senate contest, while Gina Hinojosa unseated Republican Gov. Greg Abbott. The results created additional uncertainty for Musk’s extensive business operations in the state.
Analysts at Deutsche Bank warned Wednesday that the changing political environment could create obstacles for SpaceX as it pursues major expansion projects.
“While policy is naturally hard to predict, we could envision SpaceX facing some incremental headwinds in this type of backdrop,” the analysts wrote.
One particular concern involves the construction of massive data centers, which have become increasingly important to Musk’s artificial intelligence ambitions.
During her gubernatorial campaign, Hinojosa advocated temporarily suspending approvals for new data centers until Texas adopts stronger safeguards governing water consumption, electricity prices, local decision-making, and financial incentives. She also challenged the tax advantages offered to large computing facilities.
Those proposals could directly affect expansion plans being pursued by Tesla and SpaceX.
The companies are developing additional artificial intelligence infrastructure in Texas, including a proposed project known as Terafab in Grimes County. The sprawling complex is expected to incorporate both a data center and a semiconductor manufacturing facility.
Deutsche Bank analysts cautioned that tighter requirements for constructing data centers could slow the Starbase computing project and force SpaceX to spend more money meeting new regulatory standards.
Another potential source of trouble involves SpaceX’s Starlink satellite internet service and its role in Ukraine’s war against Russia.
According to CNN, Musk and SpaceX have been directed to retain documents relating to restrictions placed on a military version of Starlink used by Ukrainian forces. The limitations reportedly interfered with Ukraine’s ability to defend itself against Russian attacks, and the records could become relevant to congressional inquiries.
The Democratic victories could also create difficulties for a possible combination of Tesla and SpaceX. Musk has publicly discussed merging the two businesses but acknowledged that any transaction would require shareholder approval. Increased regulatory scrutiny could make such a deal considerably more complicated.
The election fallout has also taken a substantial toll on Musk’s personal wealth. His fortune, which exceeded $1 trillion following SpaceX’s initial public offering in June, has fallen below $800 billion, according to Forbes, including a decline of approximately $90 billion over the past week.
Additional financial reporting indicates that the two companies lost approximately $456 billion in market capitalization over just two trading sessions, with Tesla closing Thursday at $343.69 and SpaceX at $123.62. The figures represent losses in stock market valuation rather than money directly spent or lost by the companies.
