US stocks rally, but Musk suffers a "Waterloo": Why did Tesla and SpaceX fall against the trend?
U.S. tech giants rose collectively, yet Tesla and SpaceX, both owned by Musk, moved in the opposite direction.
On November 4, Eastern Time, the results of the U.S. midterm elections gradually became clear, and the three major U.S. stock indices closed higher collectively. According to BiyaPay market data, the Dow Jones Industrial Average rose 3.03%, the S&P 500 Index rose 1.58%, and the Nasdaq Index rose 1.44%.
However, Tesla (TSLA) closed at $385.19 that day, down 3.34%; SpaceX (SPCX) closed at $135.92, down 3.81%. As of 19:59 that evening, some after-hours quotes showed that the two companies' prices had fallen further to $381.30 and $134.01.
On one side, the broader U.S. stock market was rising; on the other, the stocks of Musk's two companies were under pressure. This divergence has prompted the market to re-examine a question: after the U.S. midterm elections, what changes will Musk's business empire face?
Previously, Musk actively participated in U.S. political activities and supported Republican candidates. As Democrats made significant progress in this election and the power structure in Congress changed, the market began to focus on potential new variables in government regulation, AI data center construction, and corporate project approvals.
However, attributing this round of decline simply to "Musk's failed political bet" is not comprehensive. What is truly worth analyzing is whether changes in the political environment will affect business operations, and whether the AI businesses of Tesla and SpaceX, which the market had previously held high hopes for, can be converted into revenue and cash flow as expected.
U.S. Stocks Surge—Why Did Tesla and SpaceX Fall Behind Instead?
Judging from the market performance on November 4, a rise in the broader U.S. stock market does not mean that all tech companies will strengthen in sync.
That day, large tech platforms and some consumer and defensive stocks performed relatively well, but data center-related companies and some tech supply chain companies came under varying degrees of pressure. Capital did not simply buy the entire tech sector; rather, it was reassessing the growth expectations and policy risks of different companies.
Tesla and SpaceX underperforming the broader market that day was also related to this market sentiment.
Although the two companies are involved in electric vehicles, commercial spaceflight, and satellite internet respectively, in recent years they have both developed more connections with AI infrastructure and Musk's overall business layout.
Tesla is advancing autonomous driving, Robotaxi, and humanoid robot businesses; SpaceX continues to expand investment in the Starlink network, commercial spaceflight, and AI computing infrastructure. These businesses have long-term growth potential, but they also require sustained capital investment, and actual development depends on technological progress, project approvals, and the pace of commercialization.
Therefore, the market is focused not only on the two companies' current revenue and profits, but also on whether future growth can be delivered. When investors begin to worry about changes in the regulatory environment, slower project progress, or increased capital expenditures, the companies' valuations may come under pressure in advance.
This also means that the decline on November 4 was more like a reassessment of future growth expectations by the market, and does not represent a fundamental reversal in the two companies' fundamentals.
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Tesla's Real Test Is When Its AI Business Can Deliver Profitability
Tesla's stock price logic is no longer just about traditional car sales.
The automotive business remains an important foundation of the company's operations, but autonomous driving, Robotaxi, the Optimus humanoid robot, and the energy business have become unavoidable parts of the market's discussion of its long-term valuation.
The problem is that the commercialization progress and profit models of these businesses are not entirely the same.
The automotive business has relatively clear delivery volumes, sales prices, gross margins, and inventory data, and investors can judge operating conditions through quarterly financial reports. But autonomous driving and robotics businesses still require more technical validation, practical application, and large-scale operational data.
Take Robotaxi as an example. The market is focused not only on whether vehicles can achieve autonomous driving, but also on service scope, operational efficiency, accident liability, maintenance costs, and users' willingness to pay. Even if technological progress is made, it will take time to form stable revenue.
The same is true for the Optimus robot. Product showcases and technical demonstrations can raise market attention, but whether it can ultimately achieve commercialization in manufacturing, logistics, and other scenarios still depends on mass production capability, unit costs, and actual customer demand.
Another factor that cannot be ignored is capital expenditure.
Tesla previously estimated in its quarterly filings that capital expenditure in 2026 will exceed $20 billion, with funds going toward computing infrastructure, data centers, production facilities, and R&D. This shows that the company is investing more resources in AI and automation businesses, but it also means investors need to pay attention to the time gap between investment and return.
If the commercialization progress of new businesses meets expectations, continued investment may open up new growth space for the company; if technical validation or market expansion is slower than expected, capital expenditure may increase financial pressure for a period of time.
Therefore, when observing Tesla going forward, it is not enough to just look at whether the stock price rebounds; it is also necessary to track vehicle deliveries, gross margins, energy business performance, autonomous driving commercialization progress, and changes in capital expenditure.
SpaceX's AI Story Is Big, but Data Center Expansion Also Requires Clear Financial Calculation
Compared with Tesla, SpaceX's business structure is more diversified.
Commercial spaceflight and launch services are important businesses, while Starlink satellite internet provides continuously growing connectivity services. At the same time, the company is expanding AI-related businesses and computing infrastructure investment, attempting to combine satellite networks, computing power, and AI services.
Judging from the latest performance, SpaceX's growth is not just market imagination.
According to Reuters' report on the company's third-quarter performance, SpaceX's third-quarter revenue reached approximately $14.58 billion, up 161% year over year, higher than analyst expectations; net profit was approximately $4.4 billion. The company's revenue growth was mainly driven by the expansion of AI businesses and the growth of Starlink connectivity services.
From a business structure perspective, AI-related superintelligence businesses have become an important growth source, and connectivity services such as Starlink also provide revenue and operating profit support for the company.
But rapid revenue growth does not mean future expansion will be cost-free.
SpaceX's third-quarter capital expenditure was approximately $19.593 billion, with AI-related capital expenditure accounting for a large proportion. Capital expenditure is investment used to build and purchase long-term assets, and is not equivalent to current operating expenses, nor can it be directly subtracted from revenue to judge whether the company is losing money.
What truly needs attention is whether these investments can be converted into sustainable revenue and cash flow in a timely manner.
The construction of AI data centers requires computing chips, servers, power, cooling systems, sites, and other resources. After equipment is deployed, customer orders and continued usage are still needed to gradually generate returns. If construction progress, chip supply, or power配套设施 are delayed, capital may already have been invested while revenue realization may be postponed.
This is also why, after Democrats made progress in the elections, the market would reassess the policy environment facing U.S. AI infrastructure projects.
Data center construction involves energy consumption, land use, community impact, and environmental regulation. If local governments impose stricter approval requirements on new projects, the construction cycles and operating costs of relevant companies may be affected.
However, higher regulatory requirements do not mean projects will necessarily stall. SpaceX still has different businesses such as commercial spaceflight and Starlink, and it should not be assumed that because AI infrastructure faces policy uncertainty, the operating value of other businesses should be ignored.
Institutions Raise SpaceX Profit Forecasts—Why Is the Stock Still Under Pressure?
In this round of market action, there is another noteworthy contrast: SpaceX's stock price fell, but some institutions were raising their long-term growth forecasts for the company.
According to a report cited by Yingwei Caiqing, Morgan Stanley analyst Adam Jonas recently raised forecasts for SpaceX's future revenue and operating profit, and moved forward the expected time for the company's free cash flow to turn positive from 2035 to 2031, while also lowering previous estimates of external financing needs.
This adjustment was mainly based on growth expectations for the company's AI business, satellite connectivity services, and commercial spaceflight business.
But it is important to distinguish that institutional forecasts are not operating results the company has already achieved. An earlier free cash flow turning point does not mean SpaceX can currently fully rely on its own cash flow to support all future expansion.
Institutional models typically adjust based on factors such as revenue growth, profit margins, capital expenditure, and financing needs. As long as one key assumption changes, future valuations may adjust accordingly.
This is also why institutions raising forecasts and short-term stock declines can occur at the same time.
Investors may recognize SpaceX's long-term business space but still worry about the short-term regulatory environment, AI infrastructure investment, and capital recovery cycle. For companies whose valuations already include substantial future growth expectations, the market tends to focus more on delivery progress.
Therefore, to judge SpaceX's subsequent trend, it is not enough to look only at target prices given by institutions; it is more necessary to observe whether AI business revenue continues to grow, whether Starlink users and service revenue expand, and whether capital expenditure can gradually translate into stable operating returns.
Potential Merger of Tesla and SpaceX—What Do Shareholders Really Care About?
In addition to the elections and AI infrastructure, the potential integration between Tesla and SpaceX is also a recent market focus.
Both companies are closely related to Musk's business empire, and there is also some imaginative room for synergy in their businesses. For example, AI computing power, energy supply, automation technology, and infrastructure construction could all become entry points for outside discussion of a potential integration.
But it must be emphasized that discussion of a potential merger does not mean the transaction has been confirmed and completed.
For investors, the value of a merger cannot be judged only by how large the two companies' businesses are combined; it also depends on the transaction structure, share exchange ratio, asset valuation, and future funding needs.
If the transaction involves issuing new shares, the shareholding ratios of existing shareholders may change; if there are differences in capital expenditure and debt structures across different businesses, how resources will be allocated after the merger also needs to be considered.
Technical synergy may indeed bring long-term value, but ultimately it still needs to be reflected in indicators such as operating efficiency, customer growth, profit margins, and earnings per share.
Before the transaction terms are clarified, investors should not treat potential synergies as already realized returns. For Tesla and SpaceX, future stock price performance will still need to return to their respective operating conditions and valuation foundations.
What's the Outlook for Tesla and SpaceX? Focus on Three Signals
After the decline on November 4, what the market needs to observe next is not just whether the two stocks can rebound, but whether there are new changes in corporate fundamentals and the external environment.
First, whether policy changes truly affect corporate projects
The U.S. midterm elections changed the power structure in Congress, but policy adjustments need to go through subsequent legislative, regulatory, and specific implementation procedures. For Tesla, it is necessary to observe autonomous driving, vehicle regulation, and related project approvals; for SpaceX, attention should be paid to AI data center construction, energy supporting facilities, and the government project environment.
It cannot be concluded solely based on election results that a company has already lost a certain business opportunity.
Second, whether the AI business can continue to deliver revenue
Tesla needs to prove long-term growth expectations with actual progress in autonomous driving, Robotaxi, and robotics businesses; SpaceX needs to observe AI business revenue, Starlink connectivity services, and the operating efficiency of computing infrastructure.
If new businesses continue to expand and gradually form stable profits, the market's long-term valuation of the company may gain more support. Conversely, if capital expenditure continues to increase but revenue and cash flow growth cannot keep up, valuation pressure may continue.
Third, whether the stock price can regain support from trading volume and fundamentals
In the short term, observers can watch Tesla and SpaceX's previous lows, changes in trading volume, and the degree of capital participation during rebounds. If the stock price rebounds but trading volume is insufficient, it suggests market confidence may still be limited; if key price zones are recovered with heavy volume, further observation can be made as to whether a sustained recovery appears.
Final Thoughts
U.S. tech giants rose collectively, while Tesla and SpaceX fell against the trend. This market divergence reflects not only the political sentiment changes brought by the U.S. midterm elections.
For Tesla, the market is waiting for autonomous driving, robotics, and energy businesses to further deliver on growth expectations; for SpaceX, the rapid expansion of AI businesses has brought new revenue space while also imposing higher requirements for capital expenditure and capital recovery.
The long-term development of Musk's companies still has business support worth watching, but whether future valuations can be sustained will ultimately depend on technological progress, project approvals, profitability, and cash flow performance.
For U.S. stock investors, what is truly worth tracking is not the rise or fall on any single day, but whether there is continuously delivered operating data behind market expectations.
