Tesla, SpaceX lose over $420 billion after US midterm results
What's the story
Elon Musk's companies, Tesla and SpaceX, have witnessed a massive dip in their combined market capitalization by over $420 billion. The decline comes in the wake of the recent US midterm elections where Democrats gained control of both the House and Senate. The outcome has raised concerns among investors about potential congressional probes against Musk and stricter regulations for his companies.
Financial impact
Musk's midterm donations largely unsuccessful
Musk, who was the biggest donor to GOP candidates in the midterms with contributions exceeding $470 million, saw most of his supported candidates lose their races.
This includes Texas, where Democrats Senator-elect James Talarico and Governor-elect Gina Hinojosa defeated long-time Musk allies Ken Paxton and Greg Abbott.
The political shift has resulted in a decline in shares of both SpaceX (3.8% in premarket trading) and Tesla (3.6%).
Wealth decline
Musk's net worth drops below $800 billion
Musk's net worth, which had crossed the $1 trillion mark after SpaceX's IPO in June, has now fallen below $800 billion.
The billionaire has lost some $90 billion in the last week alone, Forbes reported.
Despite this massive drop, he still remains the richest person on Earth with a net worth of about $790 billion.
Future hurdles
SpaceX may face challenges in Texas
Deutsche Bank analysts have predicted that SpaceX could face some challenges in the current political climate.
They noted that Texas Gov.-elect Hinojosa "made data centers a major campaign issue," calling for a "moratorium on new approvals until the legislature passes stronger protections on water use, electricity costs, local control, and incentives."
This could affect SpaceX's plans to build data centers as part of its AI infrastructure expansion in Texas.
Merger challenges
Regulatory scrutiny could hinder SpaceX-Tesla merger plans
Regulatory scrutiny could also hinder Musk's plans to merge SpaceX and Tesla, a move he has advocated for while admitting that shareholder approval would be needed first.
The potential challenges come as both companies are in the process of building AI infrastructure in Texas and planning a massive facility called Terafab, which will feature a data center and semiconductor factory.