The Star reports midterm results add pressure on SpaceX, Tesla shares

Shares extend losses

The Star reports that shares of Elon Musk's companies SpaceX and Tesla fell on Thursday, continuing declines from the previous day. The article says investors were reacting to concerns that Democratic victories in the US midterm elections could slow the growth of data center build-outs.

Political concerns in Texas

According to the report, SpaceX is based in Texas and has been increasingly focused on AI data center demand. Tesla is also headquartered there. Democrats won the Texas races for Senate, governor and attorney general on Tuesday, while Musk had spent heavily supporting Republicans in the midterms. The article says the selloff also reflected fears that Democratic gains could bring stricter scrutiny of Musk's companies.

Market value and business ties

The Star says Musk's companies were on track to lose more than $380 billion in market capitalization this week. It reports that Tesla shares fell more than 11% on Thursday, while SpaceX shares declined nearly 9%. The article also says data centers have become a political issue in the state.

Data centers and related plans

The report says SpaceX has increasingly made AI computing a source of revenue, with more than half of its third-quarter sales coming from renting computing capacity. It adds that Goldman Sachs analysts estimated this week that Democratic wins at the state and local levels are likely to bring short-term moratoria on data centers, which could affect about 45% of planned US data center capacity expansion. The article also says Tesla's energy unit has been pitching storage systems to data center operators.

Merger outlook

The Star reports that the midterm results could also complicate a possible merger between Tesla and SpaceX. In October, Musk announced plans for Terafab, a joint Tesla-SpaceX chip manufacturing complex in Texas that he said could cost up to $119 billion. Analyst Dan Ives of Yorkville Ives & Co. said he believes a SpaceX/Tesla merger can still happen, but would face a much tougher regulatory path to reach 2027. Musk said on SpaceX's third-quarter earnings call last month that a merger would be a "good idea" and that special committees at both companies were examining a possible deal.