Tesla and SpaceX Lose Over $420 Billion in Market Value Following U.S. Midterm Elections

Shares of Tesla and SpaceX dropped sharply after investors grew worried that Elon Musk could face new congressional investigations and stricter rules for his companies.

SpaceX shares fell about 9%, while Tesla shares declined by about 11% on a Thursday afternoon. The drops happened during a wider tech stock sell-off, bringing the combined market value losses for both companies to more than $420 billion since the market closed on Tuesday. By the end of business on Thursday, the total losses had reached about $456 billion.

Elon Musk’s personal fortune also dropped below $800 billion, falling by about $90 billion over the past week. His wealth had previously climbed above $1 trillion following the initial public offering of SpaceX in June, according to *Forbes*. Despite the recent losses, he remains the richest person in the world.

During the midterm elections, Musk was the largest donor to Republican candidates and causes, giving more than $470 million. However, most of the candidates he supported lost their races. Democrats won control of both the House and Senate. In Texas, where Tesla and SpaceX are headquartered, Democratic candidates James Talarico and Gina Hinojosa defeated longtime Musk allies Attorney General Ken Paxton and Governor Greg Abbott.

Analysts at Deutsche Bank wrote in a note that SpaceX could face new challenges in this political environment. Governor-elect Hinojosa made data centers a major campaign issue, calling for a pause on new approvals until the state legislature passes stronger rules regarding water use, electricity costs, local control, and incentives. She also criticized tax breaks for large facilities.

Both Tesla and SpaceX are building out artificial intelligence infrastructure in Texas. They plan to build a massive facility called Terafab in Grimes County, which will include a data center and a large semiconductor factory. SpaceX also plans to build a supercomputer at its Starbase launch facility and company town in Texas, according to company job listings.

Deutsche Bank analysts warned that SpaceX's computer processing capacity in Texas could face delays. The company might also need to spend more money to meet the requirements of stricter regulations on data centers. In addition, increased regulatory oversight could block Musk's idea to merge SpaceX and Tesla, a plan that would still require approval from shareholders.

Meanwhile, Musk and SpaceX were instructed to keep records about restrictions placed on a military version of the Starlink satellite internet service in Ukraine. An aide to a Democratic senator told reporters that the restrictions made it harder for Ukraine to defend against Russian attacks.

Summary

The sharp drop in market value highlights how political shifts can directly impact high-profile companies and their billionaire leaders. With Democrats taking control of Congress and key state offices in Texas, companies like Tesla and SpaceX face potential new regulations, environmental rules, and investigations that could affect their massive artificial intelligence and data center projects.