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SpaceX, Tesla extend losses as midterm results cloud data center, merger outlook
Shares in SpaceX and Tesla fell further on Thursday as investors weighed whether Democratic gains in the US midterm elections could slow data centre construction and bring closer scrutiny of Elon Musk’s businesses. The results may also make a proposed merger between the companies harder to secure regulatory approval for.
Tesla shares dropped more than 11 per cent and SpaceX shares nearly 9 per cent, putting Musk’s companies on course to lose over US$380 billion in combined market value that week. Goldman Sachs estimated that election gains could prompt short-term data centre moratoria affecting about 45 per cent of planned US capacity expansion. More than half of SpaceX’s third-quarter sales came from renting computing capacity; Tesla’s energy unit sells storage to data centre operators. Musk has also announced a proposed Texas chip complex costing up to US$119 billion, while company committees are exploring a possible merger.
In short
- Tesla and SpaceX shares fell after Democratic midterm gains.
- The companies faced more than US$380 billion in potential weekly market value losses.
- Data centre delays and tougher merger scrutiny concern investors.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Investors may reasonably see Democratic gains as increasing the risk of delays or tighter conditions for data centre projects, which could affect businesses tied to computing capacity and energy storage. Greater regulatory scrutiny could also make a proposed merger harder to approve, justifying a reassessment of expected growth and deal prospects.
The case against
Election results do not establish that data centre moratoria or new restrictions will follow, and the estimated exposure concerns planned capacity rather than certain cancellations. A merger’s approval would depend on its details and regulators’ review, while sharp share-price falls may reflect uncertainty and expectations that could change as policy and company plans become clearer.
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