SpaceX and Tesla have lost a combined $456 billion in market value following a sharp decline in their shares, as investors weigh the possibility of increased congressional investigations and tighter regulatory scrutiny of Elon Musk’s companies after the United States midterm elections.
SpaceX shares fell by about nine per cent, while Tesla declined by approximately 11 per cent on Thursday afternoon. The losses, which coincided with a broader sell-off in technology stocks, pushed the companies’ combined market capitalisation losses to more than $420 billion since Tuesday’s market close.
By the close of trading on Thursday, the combined losses had risen to approximately $456 billion.
The market downturn has also significantly affected Musk’s personal fortune. According to Forbes, his wealth, which surpassed $1 trillion following SpaceX’s initial public offering in June, has fallen below $800 billion after declining by about $90 billion over the past week. He, however, remains the world’s richest man.
The developments come after Musk emerged as the biggest donor to Republican candidates and causes during the midterm elections, contributing more than $470 million, according to a Financial Times report.
Despite his financial backing, most of the candidates he supported lost their races, while Democrats secured control of both chambers of Congress.
In Texas, where both SpaceX and Tesla are headquartered, Democratic candidates James Talarico and Gina Hinojosa defeated two of Musk’s political allies, Republican Attorney General Ken Paxton and Governor Greg Abbott, in the Senate and gubernatorial contests, respectively.
Analysts at Deutsche Bank warned on Wednesday that the election outcome could create additional regulatory challenges for SpaceX.
“While policy is naturally hard to predict, we could envision SpaceX facing some incremental headwinds in this type of backdrop,” the analysts wrote.
They also highlighted Hinojosa’s campaign position on data centres, noting that she had called for a moratorium on new approvals until lawmakers introduce stronger protections covering water consumption, electricity costs, local control and incentives.
Hinojosa also criticised tax breaks granted to large data centre facilities.
The issue could affect Musk’s expanding artificial intelligence infrastructure projects in Texas, where Tesla and SpaceX are developing facilities to support their AI ambitions.
Both companies are planning to build Terafab, a massive complex in Grimes County, Texas, which is expected to include a data centre and a semiconductor manufacturing facility.
SpaceX is also planning to establish a supercomputer at its Starbase launch facility and company town in Texas, according to company job listings.
Deutsche Bank analysts warned that the expansion of computing capacity in Texas could face delays, while SpaceX might have to increase its capital expenditure to comply with anticipated stricter regulations governing data centre development.
Beyond infrastructure concerns, SpaceX is also facing potential congressional scrutiny over restrictions imposed on a military version of its Starlink satellite internet service in Ukraine.
CNN reported that Musk and SpaceX had been instructed to preserve records relating to the restrictions, which reportedly hampered Ukraine’s ability to defend itself against Russian attacks. The directive followed a request involving an aide to a Democratic senator.
Increased regulatory scrutiny could also complicate Musk’s proposed merger of SpaceX and Tesla, an idea he has previously promoted, although he has acknowledged that shareholder approval would be required.
Clarify the $456bn timelineTighten the opening paragraphsStrengthen the regulatory angle
Boluwatife Enome
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