Tesla falls more than 11%, SpaceX nearly 9% as data center concerns mount
Key Facts
Tesla shares fell more than 11% and SpaceX shares about 9% in Thursday’s session on Nov. 5, extending losses from the previous session, according to a report published by The Edge Malaysia. The decline came amid concerns that the results of the U.S. midterm elections could slow development of data centers and expansion projects tied to the companies. The report said the two companies were on track to lose more than $380 billion in combined market value during the week of Nov. 2–6. Democrats had scored a broad election victory, according to the Associated Press, in a result that rattled Wall Street that week. Investors’ concerns focused on the impact of the political shift on permits, regulation and potential merger talks.
Losses began in Wednesday’s session on Nov. 4, when SpaceX shares fell about 5% and Tesla shares dropped 5.6%, according to Investing.com. The decline widened in the following session as concern continued over the rise of opponents to data center projects. Democrats won gubernatorial elections in Texas and Georgia after campaigns that included calls to halt such projects, according to a Reuters report published via Investing.com. Their victories strengthen the political influence of those seeking to restrict data center development in states considered pivotal to expansion. Coverage has linked this environment to the possibility of delays for projects that require local approvals.
Estimates by Goldman Sachs analysts cited in The Edge Malaysia report suggest that Democratic victories at the state and local levels could lead to a temporary halt to some data center projects. That could affect about 45% of planned U.S. data center capacity expansion, according to the report. The possibility puts plans to build computing capacity at risk from permitting and execution hurdles. SpaceX has a direct connection to this activity: more than half of its third-quarter sales came from renting out computing capacity, the report said. The concerns therefore extend beyond the construction of new facilities to an existing business based on making computing capacity available to customers.
Tesla’s connection to data center projects also extends to its energy unit, which offers storage systems to data center operators, according to The Edge Malaysia. Any delay to domestic projects could make the potential market for these systems more vulnerable to regulatory timetable changes. In October, Elon Musk also announced Terafab, a joint chip manufacturing complex by Tesla and SpaceX in Texas, with a cost that could reach $119 billion. The project brings the two companies together in a major investment plan tied to chips and computing expansion. Political and regulatory concerns come as merger plans between the companies remain under review, according to the report.
An analyst at Yorkville Ives & Co. said the potential merger now faces a “much tougher regulatory path to complete the deal in 2027.” Musk said during SpaceX’s third-quarter earnings call in the month before the report that a merger with Tesla would be “a good idea.” The report added that special committees at the two companies are studying a potential deal, without announcing that it had been completed. In its initial public offering filing in June, SpaceX warned that a change in control of Congress could have a “material adverse effect on our growth and competitive position,” according to the Associated Press. That adds a political dimension to investors’ assessment of any deal or expansion that depends on regulatory decisions or government contracts.
SpaceX is also facing high capital spending: it reached about $19.6 billion in the previous quarter, and the company forecast that it would rise to between $35 billion and $40 billion in the current quarter, according to the Associated Press. The agency said spending in the previous quarter was close to three times its level a year earlier. Morgan Stanley, meanwhile, raised its estimates for SpaceX revenue in 2027 to $175 billion, according to Investing.com. The firm said the next Starship flight, expected during November, could be a significant catalyst. These factors show the range of issues investors are tracking, from regulatory risks to spending plans and revenue forecasts.
After Wednesday’s session, Musk said “data centers in space look very attractive right now” in a comment posted after the elections, according to Reuters via Investing.com. The remark came as concerns mount over opposition to data center projects on the ground. Tesla closed at $358.22 a share, while SpaceX, listed under the ticker SPCX, closed at $134.27 on Nov. 6, according to EL7 data. On the economic calendar, the U.S. Bureau of Labor Statistics has scheduled the release of the October Consumer Price Index for Nov. 10, 2026, at 8:30 a.m. Eastern time. The release comes after the selloff, as expansion risks and political oversight remain central to the outlook for both stocks.