SpaceX and Tesla shares declined by about 9% and 11%, respectively, on Thursday afternoon with investors concerned that Elon Musk could face new congressional probes — and his companies stricter regulation — following the U.S. midterm elections.
The declines, which correlated with a broader tech sell-off, brought aggregate market cap losses for SpaceX and Tesla to over $420 billion since Tuesday’s close.
Musk’s wealth, which had topped $1 trillion after SpaceX’s initial public offering in June, is now down below $800 billion, having dropped about $90 billion in the past week, according to Forbes. He is still the richest man in the world.
Musk was the biggest donor to GOP candidates and causes in the midterms, with his financial contributions exceeding $470 million, the Financial Times first reported.
Despite his bolstering the GOP war chest, most of the candidates Musk backed lost their races.
Democrats won control of both the House and Senate. And in Texas, where both Tesla and SpaceX are headquartered, Democrats Sen.-elect James Talarico and Gov.-elect Gina Hinojosa beat longtime Musk allies, state Attorney General Ken Paxton and Gov. Greg Abbott.
Deutsche Bank analysts wrote in a note out on Wednesday, “While policy is naturally hard to predict, we could envision SpaceX facing some incremental headwinds in this type of backdrop.”
Gov.-elect Hinojosa “made data centers a major campaign issue,” the analysts noted, calling for “a moratorium on new approvals until the legislature passes stronger protections on water use, electricity costs, local control, and incentives,” and criticizing tax breaks for large facilities.
Tesla and SpaceX are both building out AI infrastructure in Texas, and are planning to build Terafab, a massive facility, which will include a data center and sprawling semiconductor factory, in Grimes County, Texas.
SpaceX also plans to build out a “supercomputer” at its Starbase, Texas, launch facility and company town, according to company job listings.
Deutsche Bank analysts also wrote that SpaceX’s Texas compute capacity could now be at risk of delays. Capital expenditures by the company may need to increase to meet the requirements of tighter, anticipated regulations around data center buildout, the analysts wrote.
Musk and SpaceX have been instructed to preserve records concerning restrictions imposed on a military version of the Starlink satellite internet service in Ukraine, CNN first reported, citing an aide to a Democratic senator. The restrictions hampered the country’s ability to defend against attacks by Russia.
Additionally, regulatory scrutiny could block chances for Musk to merge SpaceX and Tesla, an idea he has promoted, while acknowledging shareholders’ approval would be required first.
SpaceX and Tesla had lost about $456 billion in market cap by the close of business on Thursday.
—CNBC’s Nick Wells contributed reporting.
