SpaceX and Tesla shares fall as midterm results raise data centre and merger concerns
Tesla fell more than 11% and SpaceX nearly 9% on Thursday as investors weighed possible effects of Democratic election gains on data centre expansion and scrutiny of Elon Musk’s companies.
Tesla shares fell more than 11% and SpaceX shares nearly 9% on Thursday, November 5, extending losses from the previous session as investors weighed whether Democratic gains in the US midterm elections could affect data centre construction and Elon Musk’s businesses, Reuters reported. The two companies were on track to lose more than $380 billion in combined market value that week, according to Reuters; that was a prospective estimate, not a final weekly total.
The decline puts the political outlook around Musk’s companies in focus because both have business tied to the expansion of data centres. Reuters reported that investor worries also included the possibility of tougher scrutiny. The election results describe the political setting for those concerns, but do not establish that they caused the share moves or that new restrictions will follow.
Why data centre policy matters to SpaceX and Tesla
SpaceX has increasingly pursued AI computing as a source of revenue. More than half of its third-quarter sales came from renting computing capacity, Reuters reported. The company is headquartered in Texas, where Democrats won the Senate, governor and attorney-general races. Tesla’s energy unit has also pitched storage systems to data centre operators, linking it to the same build-out.
Goldman Sachs analysts estimated that Democratic gains at state and local levels could lead to short-term data centre moratoria affecting about 45% of planned US capacity expansion. That is an estimate of possible policy effects, not a report that moratoria have been imposed. In October, Musk announced Terafab, a planned chip-manufacturing complex in Texas involving Tesla and SpaceX, with a projected cost of up to $119 billion, Reuters reported.
Election setback adds uncertainty to a possible merger
Reuters said analysts believe the results could complicate a potential merger between the companies. Musk called a merger a “good idea” on SpaceX’s third-quarter earnings call the previous month, and special committees at both companies were exploring a possible deal. The report did not describe a completed merger.
The political shift also follows Musk’s substantial spending on the election. The South China Morning Post reported that he put nearly US$474 million into political groups, overwhelmingly backing Republicans, and described the result as a setback for that political effort. The SCMP said analysts saw potential congressional scrutiny of SpaceX’s government contracts and Tesla’s China links. Those are reported expectations, not confirmed congressional actions.
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Sources and context
- SpaceX, Tesla extend losses as midterm results cloud data center, merger outlookReuters, carried by Channel NewsAsia
- As political bet fails, what happens now to Musk’s Tesla, SpaceX and China ties?South China Morning Post
AI-assisted article checked against the listed sources. NewsJaws did not conduct interviews or attend the reported events.
