Tesla and SpaceX stocks decline amid U.S. midterm election rally

U.S. tech giants rose collectively, but Tesla and SpaceX, both led by Musk, moved in the opposite direction.

On November 4 Eastern Time, as results from the U.S. midterm elections became clearer, the three major U.S. stock indices closed higher. According to BiyaPay market data, the Dow Jones Industrial Average rose 3.03%, the S&P 500 increased 1.58%, and the Nasdaq Composite gained 1.44%.

However, Tesla (TSLA) closed the day at $385.19, down 3.34%; SpaceX (SPCX) closed at $135.92, down 3.81%. As of 7:59 PM that evening, select after-hours quotes showed further declines to $381.30 and $134.01, respectively.

While the U.S. stock market as a whole is rising, stocks of two companies under Musk’s umbrella are under pressure. This divergence is prompting the market to reconsider a key question: What changes will Musk’s business empire face after the U.S. midterm elections?

Previously, Musk was actively involved in U.S. political activities and supported Republican candidates. As the Democratic Party made significant gains in this election, the balance of power in Congress has shifted, prompting markets to pay attention to potential new variables in government regulation, AI data center development, and corporate project approvals.

However, attributing this downturn solely to "Elon Musk's failed political bet" is oversimplified. What truly warrants analysis is whether changes in the political environment will impact business operations, and whether Tesla and SpaceX’s much-anticipated AI initiatives can deliver revenue and cash flow as expected.

Based on the market performance on November 4, a rise in the broader U.S. stock market does not mean all technology companies will move higher in tandem.

On that day, large technology platforms, along with certain consumer and defensive stocks, performed relatively well, while data center-related companies and some technology supply chain firms faced varying degrees of pressure. Capital did not simply buy into the entire technology sector but instead reassessed the growth prospects and policy risks of individual companies.

Tesla and SpaceX underperformed the market that day, also due to this market sentiment.

Although the two companies are respectively involved in electric vehicles, commercial spaceflight, and satellite internet, they have increasingly connected with AI infrastructure and Musk’s broader business strategy in recent years.

Tesla is advancing its autonomous driving, Robotaxi, and humanoid robotics initiatives; SpaceX continues to expand its Starlink network, commercial spaceflight, and AI computing infrastructure investments. These businesses hold long-term growth potential but require ongoing capital investment, with actual progress dependent on technological advancements, regulatory approvals, and the speed of commercialization.

Therefore, the market is not only focused on the current revenue and profits of the two companies, but also on whether future growth will materialize. When investors begin to worry about changes in the regulatory environment, slowing project progress, or increased capital expenditures, the companies’ valuations may come under pressure ahead of time.

This also means that the decline on November 4 was more of a market reassessment of future growth expectations, rather than an indication that the fundamental outlook for either company has fundamentally reversed.

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Tesla's stock valuation is no longer based solely on traditional automobile sales.

The automotive business remains a vital foundation of the company’s operations, but autonomous driving, Robotaxi, Optimus humanoid robots, and energy services have become indispensable topics in market discussions about its long-term valuation.

The issue is that the commercialization progress and revenue models of these businesses are not entirely the same.

The automotive business has relatively clear data on delivery volumes, sales prices, gross margins, and inventory, allowing investors to assess operational performance through quarterly financial reports. However, autonomous driving and robotics businesses still require further technical validation, real-world applications, and large-scale operational data.

Using Robotaxi as an example, market attention is not only on whether the vehicles can achieve autonomous driving, but also on service coverage, operational efficiency, liability for accidents, maintenance costs, and users' willingness to pay. Even with technological advancements, it will take time to establish stable revenue.

The same applies to the Optimus robot. While product demonstrations and technical showcases can increase market attention, commercialization in industries such as manufacturing and logistics ultimately depends on mass production capabilities, unit costs, and actual customer needs.

Another factor that cannot be ignored is capital expenditure.

Previously, Tesla estimated in its quarterly filing that capital expenditures in 2026 would exceed $20 billion, with funds allocated toward computing infrastructure, data centers, manufacturing facilities, and R&D. This indicates the company is increasing its investment in AI and automation initiatives, but also means investors must pay attention to the time lag between expenditures and returns.

If the commercialization of the new business proceeds as expected, continued investment could open new growth opportunities for the company; if technology validation or market expansion lags behind expectations, capital expenditures may increase financial pressure for a period of time.

Therefore, when observing Tesla moving forward, it’s not enough to simply monitor whether the stock price rebounds—you also need to track vehicle deliveries, gross margin, performance of the energy business, progress in commercializing autonomous driving, and changes in capital expenditures.

Compared to Tesla, SpaceX has a more diversified business structure.

Commercial spaceflight and launch services are key business areas, while Starlink satellite internet provides continuously growing connectivity services. Meanwhile, the company is expanding its investments in AI-related businesses and computing infrastructure, aiming to integrate satellite networks, computing power, and AI services.

Based on the latest financial results, SpaceX's growth is not just market speculation.

According to Reuters' report on the company's third-quarter earnings, SpaceX generated approximately $14.58 billion in revenue for the third quarter, a 161% year-over-year increase exceeding analyst expectations, with net profits of approximately $4.4 billion. The company's revenue growth was primarily driven by expansion in its AI business and increased demand for Starlink connectivity services.

From a business structure perspective, AI-related superintelligence services have become a significant source of growth, and connectivity services such as Starlink also provide revenue and operating profit support for the company.

However, rapid revenue growth does not mean that future expansion comes without costs.

SpaceX's capital expenditures for the third quarter amounted to approximately $19.593 billion, with a significant portion allocated to AI-related spending. Capital expenditures refer to investments in the construction and acquisition of long-term assets and are not equivalent to current operating expenses; they cannot be directly subtracted from revenue to determine whether a company is losing money.

What truly matters is whether these investments can be promptly converted into sustainable revenue and cash flow.

Building an AI data center requires resources across multiple areas, including computing chips, servers, power, cooling systems, and facilities. After equipment deployment, returns only gradually materialize with customer orders and sustained usage. Delays in construction, chip supply, or power infrastructure can result in delayed revenue realization despite prior capital investment.

This is also why, after the Democratic Party made gains in the election, the market reassessed the policy environment facing U.S. AI infrastructure projects.

Data center construction involves energy consumption, land use, community impact, and environmental regulations. If local governments impose stricter approval requirements for new projects, the construction timeline and operational costs for related companies may be affected.

However, increased regulatory requirements do not mean a project will necessarily halt. SpaceX still has diverse businesses such as commercial spaceflight and Starlink, and the operational value of these other businesses should not be overlooked simply because its AI infrastructure faces regulatory uncertainty.

In this market cycle, another notable contrast is worth noting: while SpaceX’s stock price has declined, some institutions have raised their long-term growth forecasts for the company.

According to Investing.com, Morgan Stanley analyst Adam Jonas recently raised SpaceX’s future revenue and operating profit forecasts, moved up the expected timeline for positive free cash flow from 2035 to 2031, and lowered previous estimates of external financing needs.

This adjustment is primarily based on expected growth in the company’s AI business, satellite connectivity services, and commercial space operations.

However, it is important to distinguish that institutional forecasts are not actual operational results already achieved by the company. An earlier positive free cash flow does not mean that SpaceX currently has sufficient internal cash flow to fully fund all future expansions.

Institutional models are typically adjusted based on factors such as revenue growth, profit margins, capital expenditures, and financing needs. Any change in a key assumption can lead to a revision in future valuations.

This is also why institutional upgrades to forecasts and short-term stock declines can occur simultaneously.

Investors may recognize SpaceX’s long-term business potential but remain concerned about the short-term regulatory environment, investments in AI infrastructure, and the time horizon for capital recovery. For companies whose valuations already incorporate significant future growth expectations, the market tends to place greater emphasis on the pace of execution.

Therefore, to assess SpaceX’s future trajectory, it’s not enough to rely solely on target prices set by institutions; it’s essential to monitor whether AI revenue continues to grow, whether Starlink user base and service income expand, and whether capital expenditures gradually translate into stable operational returns.

In addition to elections and AI infrastructure, the potential integration between Tesla and SpaceX has also been a focal point of recent market attention.

Both companies are closely tied to Musk’s business empire and offer potential synergies in their operations. For instance, AI computing power, energy supply, automation technologies, and infrastructure development could all serve as entry points for discussions around potential integration.

However, it is important to emphasize that potential merger discussions do not mean the transaction has been finalized.

For investors, the value of a merger cannot be determined solely by the combined size of the two companies’ businesses; it must also consider the transaction structure, share exchange ratio, asset valuation, and future capital requirements.

If the transaction involves issuing new shares, the ownership percentage of existing shareholders may change; if there are differences in capital expenditures and debt structures across different business segments, consideration must also be given to how resources will be allocated after the merger.

Technological collaboration can indeed generate long-term value, but it must ultimately be reflected in metrics such as operational efficiency, customer growth, profit margins, and earnings per share.

Before the terms of the transaction are clearly defined, investors should not treat potential synergies as realized gains. For Tesla and SpaceX, future stock performance will still depend on their respective business operations and valuation fundamentals.

After the decline on November 4, what the market needs to watch next is not just whether these two stocks can rebound, but whether there have been any new changes in corporate fundamentals or the external environment.

First, do policy changes truly impact business projects?

The U.S. midterm elections have altered the balance of power in Congress, but policy adjustments require subsequent legislative, regulatory, and implementation processes. For Tesla, monitor developments in autonomous driving, vehicle regulations, and related project approvals; for SpaceX, focus on AI data center construction, energy infrastructure, and the government project environment.

You cannot conclude that a company has lost a business opportunity solely based on election results.

Second, can the AI business consistently generate revenue?

Tesla needs to demonstrate tangible progress in its autonomous driving, Robotaxi, and robotics businesses to justify long-term growth expectations; SpaceX needs to show progress in AI revenue, Starlink connectivity services, and the operational efficiency of its computing infrastructure.

If the new business continues to expand and gradually generates stable profits, the market's long-term valuation of the company may receive stronger support. Conversely, if capital expenditures continue to rise without corresponding growth in revenue and cash flow, valuation pressures may persist.

Third, can the stock price regain support from volume and fundamentals?

In the short term, observe Tesla and SpaceX’s前期 low points, changes in trading volume, and the level of capital participation during rebounds. If the price rebounds but volume is insufficient, it may indicate that market confidence remains limited; if the price recovers key price levels on increased volume, further monitor whether a sustained recovery emerges.

U.S. tech giants rose collectively, but Tesla and SpaceX declined against the trend—this market divergence reflects more than just political sentiment driven by the U.S. midterm elections.

For Tesla, the market is waiting for further realization of growth expectations in autonomous driving, robotics, and energy businesses; for SpaceX, the rapid expansion of its AI business has opened new revenue opportunities while also increasing demands for capital expenditure and capital recovery.

The long-term development of Musk’s companies still has meaningful business fundamentals to support them, but whether their future valuation can be sustained ultimately depends on technological progress, project approvals, profitability, and cash flow performance.

For U.S. stock investors, what truly matters is not daily price fluctuations, but whether underlying operational data consistently meet market expectations.