Tesla, SpaceX Shares Fall as Democrats Gain Edge in U.S. Midterms
Summary
- Tesla and SpaceX shares each fell about 1.8% in after-hours trading as a Democratic Party victory in the U.S. midterm elections became more likely.
- Market participants said tighter AI industry regulation and obstacles to a proposed Tesla-SpaceX merger could emerge if Democrats secure control of Congress.
- Tesla shares have risen about 34% from their late-July low on AI business expansion and expectations for a SpaceX merger, while SpaceX has maintained a valuation of about $1.9 trillion since its IPO.
Forecast Trend Report by Period
Tesla and SpaceX shares fell in tandem as Democrats appeared increasingly likely to prevail in the U.S. midterm elections.
Bloomberg reported on November 4 that Tesla and SpaceX shares each dropped about 1.8% in after-hours U.S. trading the previous day. The move came just after Democratic Senator Jon Ossoff appeared headed for re-election in Georgia. As prospects for Democratic control of both the House and Senate became clearer, regulatory uncertainty surrounding the two companies also increased.
Market participants say that if Democrats secure control of Congress, regulation of the artificial intelligence industry could tighten and efforts to pursue a merger between Tesla and SpaceX could face setbacks. Congress cannot directly block such a merger, but lawmakers could use investigative and oversight powers to delay the process.
Vikram Rai of First New York said that if Democrats take both chambers of Congress, the two companies' shares would be exposed to significant news-driven risk.
Tesla shares have climbed about 34% from their late-July low, helped by the company's AI expansion and expectations for a SpaceX merger. SpaceX has maintained a valuation of about $1.9 trillion since its initial public offering in June. Discussions on a merger between the two companies, however, remain at an early stage.
Musk's close ties to the Republican Party have also added to investor concern. Ahead of the midterm elections, Musk provided about $450 million in support to Republicans and has been a key backer of President Donald Trump. If Democrats take control of Congress, scrutiny of Musk's business activities and government contracts could increase.
It remains unclear whether the share-price decline tied to the election results will turn into a prolonged slump. Mark Hackett, chief strategist at Nationwide Funds Group, said narratives and sentiment tend to matter ahead of an election, but once voting is over, corporate fundamentals and reality regain the upper hand.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.