SpaceX and Tesla shares tumble as Democratic midterm wins raise data-center regulatory concerns

Shares of Elon Musk's SpaceX and Tesla dropped on Thursday, extending losses that began the previous session. The decline follows Democratic victories in Texas races for Senate, governor and attorney general, prompting worries that the new political landscape could tighten oversight of data-center development.

SpaceX, which has shifted toward AI computing services, saw its stock fall nearly 9%, while Tesla's shares slid more than 11%. Together, the two companies were on track to lose over $380 billion in market value this week.

Analysts at Goldman Sachs noted that Democratic gains at state and local levels could lead to short-term moratoria on data-center construction, potentially affecting about 45 % of planned U.S. capacity expansion. Tesla's energy division also markets storage systems to data-center operators.

In October, Musk announced a joint Tesla-SpaceX chip-manufacturing complex, dubbed Terafab, in Texas with an estimated cost of up to $119 billion. The midterm outcomes may also complicate a prospective merger of the two firms.

"We will believe a SpaceX/Tesla merger happens but now faces a much tougher regulatory roadmap to get this deal done in 2027 given this new political blue roadmap in DC/Texas," said Dan Ives, partner and senior managing director at Yorkville Ives & Co.

Musk previously described a merger as a "good idea" during SpaceX's third-quarter earnings call, noting that special committees at both companies were examining the possibility.