The accident resonated worldwide. Major tech companies have been on the stock market since the Democrats’ victory in the US midterms, a political factor that is now changing companies’ strategies to face tougher regulation of AI. The decline has also been particularly noticeable in companies led by Elon Musk. Tesla closed Thursday at $343.69, down 10.77% on the day. And most of the damage occurred in just two sessions, a drop it also shares with SpaceX.
Why does it matter? Tesla and SpaceX lost more than $420 billion in combined market value between late Tuesday and Thursday afternoon, CNBC reports. The massive selloff in shares has nothing to do with the company’s turnaround, but rather, like shares of The Motley Fool, investors are assessing political risk after the midterm elections. Democrats captured both houses of Congress and also won elections for the Senate, governor, and attorney general in Texas, where both agencies are based.
Tesla’s market performance in the last five days. Photo: TradingView
in statistics. Tesla fell 11% on Thursday after a 3.3% drop the previous day, bringing it down nearly 24% for the year. SpaceX closed down 9% at $123.62, as reported by Bloomberg. Poor Musk, his fortune is now under $800 billion, according to Forbes, after SpaceX’s IPO in June reached $1 trillion. PS: He is still the richest man in the world.
Details. According to the Financial Times, Musk was the largest Republican donor of the cycle, contributing more than $470 million. Most of their candidates have been defeated, so now investors see risks specifically to the survival of data centers and greater government regulation of their operations.
Deutsche Bank analysts warned that SpaceX’s computing capacity in Texas could face delays and increased capital spending to comply with stricter regulations. Goldman Sachs estimates that Democratic victories at the state and local level could bring about a short-term moratorium that would affect about 45% of planned data center expansion in the United States. That’s important because more than half of SpaceX’s sales in the third quarter came from leasing computing power, as we reported a few weeks ago.
Separately, CNN reported that Musk and SpaceX were asked to maintain records regarding restrictions on Ukraine’s military version of Starlink. Investors fear this is the first sign of scrutiny in Congress.
between the lines. The two stocks do indeed share the same big bets, as Musk announced TerFab in October, a macro chip development center with Tesla and SpaceX at a cost of up to $119 billion. And the merger has been proposed for some time, since at SpaceX’s latest results presentation, Musk called it a “good idea.” Several special committees of both companies have been exploring a deal for some time. Now the deal may face a tougher regulatory roadmap.
The sell-off was also associated with steep losses in chip and data center stocks that dragged down major indexes, largely on fears that sweeping AI could cripple spending.
Cover image Tesla
In Xataka | US stock market historic decline: Big tech companies are down between 9% and 19% this time
