Tesla, SpaceX Falls Hit by Texas Election Shifts

Tesla shares have fallen more than 11%, while SpaceX is down nearly 9%, according to the context supplied. The slump follows Democratic victories in Texas, where both companies are based, and where Musk had backed Republican candidates in state and federal races. Texas has become a key battleground for data-center expansion, and that is now crucial to SpaceX’s business mix.

Goldman Sachs analysts said this week that Democratic wins at the state and local level could lead to temporary moratoriums on data-center construction, a shift that could affect roughly 45% of planned U.S. capacity expansion. That is a meaningful risk for SpaceX because more than half of its third-quarter revenue came from leasing computing power, making its AI infrastructure ambitions more than a side project.

Tesla has exposure too. Its energy business sells storage systems to data-center operators, so any slowdown in new builds would also hit another growth avenue. And if Musk’s long-discussed push to tie his companies more closely together advances, the political and regulatory backdrop could matter even more. In October, he outlined plans for “Terafab,” a joint chip-manufacturing complex for Tesla and SpaceX in Texas that could eventually be worth as much as $119 billion.

That is why investors should not think of this week’s decline as a simple headline-driven wobble. It is really about the market putting a higher discount rate on Musk’s vision. A potential merger between Tesla and SpaceX, which Musk called a “good idea” last month, could become harder to pull off after the election results, according to Dan Ives of Yorkville Ives & Co. Special committees at both companies are already studying the possibility, but the path to a 2027 deal now looks more complicated.

Tesla’s own trading picture has also weakened. The stock is sitting below its 200-day moving average, while the relative strength index has cooled from overbought levels earlier in the year to more neutral territory, a sign that momentum traders are no longer driving the name the way they once did. Adalytica’s Tesla Earnings Sentiment snapshot shows “Extreme Fear,” reflecting how quickly confidence has deteriorated.

For investors, the larger lesson is that Musk’s companies still have powerful long-term narratives — electric vehicles, energy storage, AI infrastructure and advanced manufacturing — but those narratives now have to survive political friction and heavy capital demands. If you already own these names, this is a moment to focus on balance-sheet strength, free cash flow and whether the next leg of growth can be funded without permanent valuation strain. If you are considering an entry point, patience may be the better strategy than trying to catch the bottom. In the long run, the winners will be the businesses that can turn ambition into repeatable economics, not just market-moving headlines. Worth watching, but only for investors comfortable with volatility and a very long time horizon.