Tesla and SpaceX both fell by about 9% and 11% on Thursday afternoon, respectively. Investors are concerned that Elon Musk, who serves as the CEO of both companies, may face new congressional investigations after the U.S. midterms, and that his companies could also encounter stricter regulations.
This round of decline coincided with a broader sell-off in tech stocks, causing the combined market value of SpaceX and Tesla to lose over $420 billion since the close on Tuesday.
According to Forbes, Musk's wealth once exceeded $1 trillion after the SpaceX went public in June, but it has now dropped below $800 billion, with a reduction of about $90 billion in the past week. He remains the world's richest person.
The Financial Times was the first to report that Musk is the largest donor to Republican candidates and related political activities in the mid-term elections, with a total donation of over $470 million.
Despite providing support for the Republican Party's fundraising efforts, most of the candidates supported by Musk lost the election.
The Democratic Party has won control of both the House of Representatives and the Senate. In Texas, the headquarters of Tesla and SpaceX, newly elected Senator James Tarrantico and newly elected Governor Gina Hinojosa defeated Musk's long-time allies Ken Paxton and Greg Abbott.
In a report released on Wednesday, analysts at Deutsche Bank wrote: "Although policy trends are inherently difficult to predict, against this backdrop, we can assume that SpaceX will face some additional resistance."
Analysts pointed out that Texas Governor-elect Hinestosa "made data centers a major issue in his campaign" and called for a "moratorium" on new approvals until stronger measures for water use, electricity costs, local control, and incentives are passed by the legislative body. At the same time, he criticized tax exemptions for large facilities.
Both Tesla and SpaceX are building artificial intelligence infrastructure in Texas, and they plan to construct Terafab in Graymes County, Texas – a large-scale facility that will include data centers and a large semiconductor factory.
According to the company's recruitment information, SpaceX also plans to build a "supercomputer" at its Starbase launch facility in Texas and in the company's town.
Deutsche Bank analysts also wrote that the construction of SpaceX in Texas may now face the risk of delays. The analysts stated that in order to meet the stricter and anticipated regulatory requirements surrounding data center construction, the company's capital expenditures may need to increase.
According to CNN, citing an assistant to a Democratic senator, Musk and SpaceX have been requested to retain records related to the restrictions they imposed on Ukraine's military version of the Starlink satellite internet service. These restrictions have hindered Ukraine's ability to defend against Russian attacks.
In addition, regulatory reviews may also prevent Musk from pursuing the opportunity to merge SpaceX with Tesla. Musk has proposed this idea, while acknowledging that it would require prior approval from shareholders.
