On Thursday, the shares of Elon Musk’s companies — SpaceX and Tesla — fell sharply, continuing the downward trend observed in the previous session. Investors are concerned that a Democratic victory in the U.S. midterm elections could slow the development of data centers, UNN reports, citing Reuters.
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SpaceX, which is actively involved in developing infrastructure for artificial intelligence (AI), is based in Texas — just like Tesla. On Tuesday, Democrats won elections in the state for the Senate, as well as for governor and attorney general. It is worth noting that Musk spent significant sums supporting Republicans during these elections.
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The massive sell-off in the shares also reflects concerns that the Democrats’ success could lead to tighter oversight of Musk’s businesses.
Overall, the market capitalization of Musk’s companies could shrink by more than $380 billion this week. On Thursday, Tesla shares fell by more than 11%, while SpaceX shares declined by nearly 9%.
In this state, the issue of data centers has become the subject of fierce political disputes. SpaceX is increasingly turning to AI computing capacity as a source of revenue: the rental of such capacity accounted for more than half of the company’s revenue in the third quarter.
Goldman Sachs analysts suggested this week that Democratic victories at the state and local levels could lead to the introduction of short-term moratoriums on data center construction. This could potentially affect about 45% of planned projects to expand data center capacity in the United States.
Tesla is also involved in this process: its energy division offers energy storage systems to data center operators.
In October, Musk announced plans to create Terafab — a joint Tesla and SpaceX complex in Texas intended to manufacture microchips; the project could cost as much as $119 billion.
According to analysts, the results of the midterm elections could also complicate a potential merger of the two companies. “We believe a merger between SpaceX and Tesla is possible, but given the new political situation in Washington and Texas, the path to completing it in 2027 will be significantly more difficult because of regulatory obstacles,” said Dan Ives, a partner and senior managing director at Yorkville Ives & Co.
Last month, during a conference call on SpaceX’s third-quarter financial results, Elon Musk said that combining with Tesla would be a “good idea,” while special committees of both companies are currently considering the possibility of such a deal.