Tesla (TSLA) and SpaceX Lose Over $420B Market Cap After Midterms

Tesla (TSLA) and SpaceX shares fell by about 11% and 9% respectively after the U.S. midterm elections, leading to a combined market capitalization loss of over $420 billion since Tuesday's close. This decline coincided with a broader technology sector sell-off and investor concerns about potential congressional probes and stricter regulations targeting Elon Musk's companies.

Elon Musk's net worth dropped by approximately $90 billion in the last week, falling below $800 billion from over $1 trillion after SpaceX's June initial public offering. Musk was the largest donor to GOP candidates this election cycle, contributing more than $470 million, but many of the candidates he supported lost, resulting in Democratic control of both the House and Senate. Key Texas races saw Democratic victories over Musk allies, raising concerns about potential regulatory headwinds, especially regarding data centers and energy use, which are relevant to SpaceX and Tesla's plans in Texas.

Deutsche Bank analysts highlighted possible delays and increased capital expenditures for SpaceX's AI infrastructure projects and data center expansions due to expected tighter regulations. Additionally, SpaceX faces regulatory scrutiny related to restrictions on its Starlink internet service used by Ukraine. The article suggests that these election results and regulatory risks could also impede Musk's plans to merge SpaceX and Tesla. For investors, these developments signal increased regulatory uncertainty and potential higher costs, which could affect Tesla's stock performance and SpaceX's expansion plans.