SpaceX and Tesla Stock Plunges Have Wiped About $450 Billion in Value Since the Midterms. Is It Time to Buy?

The two companies helmed by the world's richest person have had a rough two-day stretch on the market. Tesla (NASDAQ:TSLA) closed at $398.50 on Election Day, and by 3:08 p.m. ET Thursday, it was trading at about $342, down 14%, representing a loss of about $225 billion in market value. SpaceX (NASDAQ:SPCX) fell from $141.31 to about $125, down 12%, or about $227 billion. Together, that's about $450 billion gone in two sessions, most of it on Thursday, when Tesla fell about 11% and SpaceX about 8%.

To illustrate how steep the drop has been, SpaceX is now trading below its $135 IPO price from June.

Why They're Falling

If you had to sum it up in one word: politics. Democrats now control both chambers of Congress, and Musk, a top ally of President Donald Trump, is a likely target. Speaking on the All-In podcast on election night, Texas Republican Sen. Ted Cruz said Democrats had signaled they would use subpoenas "to go after Elon Musk." In Texas, home to both companies, voters elected a Democratic attorney general for the first time since 1994.

But political sentiment isn't the only reason. The Nasdaq was headed for its worst day in 18 months on Thursday as investors dumped chip and data-center stocks, on fears that new leaders in Washington and the states could slow data-center construction. SpaceX, of course, is exposed: Last month, it committed to a roughly $40 billion lease for AI chips with an entity managed by Apollo Global Management, with payments starting in the first half of 2027.

Adding to the fire for SpaceX, Wall Street is reportedly trying to sell off pieces of that $40 billion chip deal to other investors, with Goldman Sachs and Apollo leading the effort, according to Bloomberg on Thursday.

The Case for SpaceX

SpaceX made money last quarter: $2.79 billion in operating income and $4.4 billion in net income, though it's still $413 million in the red for the first nine months of the year. Nothing that happened in Washington this week changes its launch business or Starlink.

But the fine print, or at least the filing details, are worth noting. That net income included a $390 million tax benefit and a $561 million unrealized gain on its stake in the Boring Company, Musk's tunneling firm, and two customers made up about half of quarterly revenue. Even after the drop, SpaceX is valued at about $1.7 trillion, roughly 150 times its third-quarter operating income on an annualized basis.

The Case for Tesla

Part of Tesla's bull case rests on robotaxis. On Tesla's October earnings call, CFO Vaibhav Taneja told analysts he expects robotaxis to make a real dent in both sales and profits in 2027, and the firm said the Cybercab was due to launch in Dallas this month. Musk told analysts Tesla will end up doing "a majority of all passenger miles on earth" -- "unless we are stopped by governments."

That caveat matters more this week. Self-driving cars depend on regulators, and Washington just got less friendly to Musk. Taneja also conceded that the robotaxi business hasn't yet reached its cost target of 30 cents per mile.

The two companies are also tied together. Tesla's filing puts its SpaceX stake at $2.87 billion as of Sept. 30, and shows SpaceX with a $729 million balance owed to Tesla, most of it tied to Megapack batteries still on order. Bad news for one tends to hit the other.

So, Are They a Buy?

Not all at once. The political risk is real, but for now it's mostly talk. The new Congress isn't seated until January, and investigations take time. Meanwhile, a two-day drop of 12% to 14% doesn't make either stock cheap.

If you believe in Musk's long-term plans, this is a reasonable time to start a position slowly. Buy in small pieces over several weeks, and keep it a small part of your portfolio, because these are among the most volatile tech stocks you can own.

If you can only pick one, SpaceX gives you a launch and satellite business that's already earning money, while much of Tesla's value rides on robotaxis that are just getting started. And if headlines out of Washington would keep you up at night, it's fine to wait until the political picture is clearer.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends Space Exploration Technologies. The Motley Fool has a disclosure policy.