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Why SpaceX Stock Is Still Going Down
Key Points
SpaceX went public in June boasting of a $26.5 trillion total addressable market in AI.
Elon Musk bet the company on AI.
Now data center worries have made AI stocks suddenly unpopular.
Elon Musk made a bold bet on artificial intelligence when he IPO'd Space Exploration Technologies (NASDAQ:SPCX) in June, highlighting a total addressable market for "Super Intelligence" worth $26.5 trillion. So how is that working out for him today?
Well, as of 11:30 a.m. ET, SpaceX stock is down 7.5% -- its second day in a row of losses -- and now SpaceX is back trading below its IPO price.
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Image source: The Motley Fool.
What's wrong with SpaceX?
What's the matter with SpaceX today? Well, as you'll recall, the U.S. held its midterm Congressional elections on Tuesday, and the Blue Wave that broke over Congress probably had a lot to do with this rout. Investors are worried that a Democratic Congress might impose new regulations on artificial intelligence in general and on data centers in particular, putting a big chunk of SpaceX's business at risk.
Axios reports that newly elected governors in the four biggest states for data center construction are all Democratic -- and several of them made data center regulation a focus of their campaigns. Goldman Sachs adds that "the Democratic win [is] potentially making new builds harder" to win approval.
As a result, StreetInsider.com reports that investors are starting to wonder whether "the sell-AI trade [is] here to stay?"
What it means for SpaceX stock
As for me, I continue to believe that this theory -- if correct -- would actually be good news for SpaceX.
Mind you, I'm still leery of investing in unprofitable and cash-burning SpaceX stock. But if governors start making it harder to build data centers on Earth, while consumer clamor for cheap AI keeps data center services in demand, then SpaceX's solution of building data centers in space, far from gubernatorial regulation, makes a lot of sense to me.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Space Exploration Technologies. The Motley Fool has a disclosure policy.