Elon Musk emerges as a significant loser in the recent US midterm elections due to his unprecedented financial support for the Republican Party. As the wealthiest man on Earth and the leader of both Tesla and SpaceX, Musk was the single largest campaign donor for Republicans, having previously served as "Doge Chief" at the White House to improve administrative efficiency and leading a new Department of Defense initiative. His close ties with Donald Trump and MAGA Republicans had previously driven Tesla stock up by over 90% in weeks before Trump's return to office, though some gains were later lost as their relationship strained.
The decisive victory for Democrats poses multiple threats to Musk's billion-dollar enterprises. Vikram Rai, a portfolio manager at First New York, warns that the political shift could stall Musk's planned merger between Tesla and SpaceX. This consolidation is a central goal for Musk, with Bloomberg reporting an intention to announce the deal in the first half of next year while Trump remains in office until early 2029. A Democratic administration could slow this process through hearings, subpoenas, and reviews of federal contracts, which are critical given that SpaceX receives billions in orders from NASA and the US Department of Defense.
Furthermore, a potential slowdown in the data center boom could severely impact SpaceX alongside other tech and neocloud companies renting GPU computing power for AI applications. Larry Fink, CEO of BlackRock, noted in an October interview that while rapid data center expansion is unpopular with voters, it is a primary driver of the US economy. Fink warned that halting new data center construction across the US could even trigger a recession.
The political landscape in Texas, Musk's chosen corporate headquarters since 2021 for Tesla and 2024 for SpaceX, has also shifted dramatically. The state, previously a conservative stronghold offering low taxes and minimal regulation, will now be represented by a Democratic Senator and governed by a new Democratic Governor, Gina Hinojosa. This change marks a turning point for the region, where approximately 30% of new data center capacity is expected to develop. Hinojosa has campaigned on stricter approval processes and regulations, meaning tech companies must prepare for higher costs and longer procedures.
Despite these political headwinds, investors are reminded that politics is not the sole factor influencing stock prices in the coming months. Strong quarterly results from SpaceX and Tesla could outweigh the negative sentiment. Additionally, Musk appears shielded from potential political retaliation, as Trump has indicated he would grant him a preemptive pardon to avoid possible penalties.
Sources: Handelsblatt.