Midterm Election Impact: SPCX, ASTS, RKLB Stocks Sink As Musk's Political Ties Put Tesla-Spacex Merger Under Fresh Scrutiny

(MENAFN- AsiaNet News)

• Space stocks fell overnight as Democratic midterm gains heightened concerns about political scrutiny of Elon Musk's businesses.
• Influencer Alexandra Merz said greater congressional scrutiny could complicate a Tesla-SpaceX merger without automatically blocking it.
• George Noble urged adding to his existing SpaceX and Tesla shorts, citing longstanding concerns about spending, cash burn and valuations.

SpaceX (SPCX), AST SpaceMobile (ASTS) and Rocket Lab (RKLB) shares fell overnight as fears of political backlash against Elon Musk following Democratic midterm gains spilled into the broader space sector, raising fresh questions about a potential Tesla-SpaceX merger.

SPCX, RKLB, ASTS, Planet Labs (PL), Redwire (RDW) and Intuitive Machines (LUNR) all fell between 2% and 6% overnight heading into Wednesday.

Democrats won the Senate and are projected to take the House, raising the prospect of tougher scrutiny of Musk's government dealings. The selling also swept the wider market: Nasdaq futures fell 0.4% and S & P 500 futures slid 0.3%, and Dow futures slipped 0.1% heading into Wednesday trade.

Analyst Floats SpaceX Deal Possibility

Satellite communications and spectrum consultant Tim Farrar raised the prospect of Musk shifting the spotlight from politics to business.

“Will Musk/SpaceX announce some business deal tomorrow to change the focus away from politics?” he asked on X. His doubts come after a recent note in which he speculated that SpaceX could pursue EchoStar's remaining business through a share-based deal involving wireless assets and spectrum. 

Musk's Political Bet Comes Under Fire

Meanwhile, Alexandra Merz, CEO of L & F Investor Services, questioned Musk's political spending:“First time I see Elon not making good on the money he invests.” Musk contributed $446 million during the 2026 midterm election cycle, mostly to Republican-aligned groups.

Musk's ties to Trump and his former role leading DOGE have raised the stakes, with Democrats threatening investigations into his government work and federal contracts. Lawmakers have also sought a probe into reported SpaceX communications restrictions in Ukraine.

Trump recently signaled willingness to consider pre-emptive pardons for Musk and other allies, saying:“I would if I needed to, sure. I wouldn't even think about it. I did it for J6.”

Tesla-SpaceX Deal Faces A Tougher Path

Merz said Democratic gains could bring more hearings, subpoenas and scrutiny of government contracts, complicating a Tesla-SpaceX merger without automatically blocking it.“Congress cannot simply veto a private merger,” she said.“It does not, by itself, put the merger off the table.”

She identified shareholder approval, special-committee processes and regulatory reviews as the key hurdles. Both companies have formed committees to assess a merger. Merz pointed to committee progress, potential disclosures ahead of Tesla's Dec.3 annual meeting and formal deal terms as the next developments to watch. 

Noble Urges Bigger Shorts, Cardone Warns On Texas

Veteran investor George Noble urged adding to his bearish bets on Musk's companies.

“Elon Musk is the biggest loser in the elections tonight. TIME to add to our profitable short positions in $SPCX and $TSLA,” he said on X.“The speed of the coming collapse will be something to behold.”

Last month, Noble called Tesla and SpaceX short calls at $485 and $145, respectively, pointing to cash burn, heavy spending and high valuations. He acknowledged then that Tesla had fallen since his call, while SpaceX had risen.“The election doesn't solve the AI funding problem.” 

Cardone Capital founder and CEO Grant Cardone also flagged political risks:“If talarico wins Texas it won't be good for SpaceX or the AI bet.” Democrat James Talarico defeated Republican Ken Paxton, ending Democrats' statewide losing streak in Texas dating to 1994.

Morgan Stanley Sees SpaceX Cheaper Than S & P 500

On the other hand, Morgan Stanley offered a bullish counterpoint, as per a note shared by Tesla investor and influencer Sawyer Merritt.“On fiscal year 2028, $SPCX trades cheaper than the S & P500. Interesting,” the firm said.

Using a $140 reference share price and projected 2028 adjusted earnings of $109 billion, the research firm put SpaceX at 17.6 times estimated earnings, just below the S & P 500's estimated 17.7 times multiple. He nearly doubled his 2027 revenue forecast to $175 billion and raised his 2028 revenue and operating-income estimates to $289 billion and $119 billion, respectively.

“At the time of our initiation, we had expected SPCX to be FCF negative until 2035. Today, we forecast the company to achieve positive FCF by 2031 - a 4 year pull-forward FCF break-even,” Morgan Stanley said. Projected borrowing fell to $390 billion through 2031 from $670 billion through 2035, though the forecasts cover different periods.

How Do Retail Traders Feel About Space Stocks?

On Stocktwits, sentiment for SPCX, ASTS and RKLB was 'bearish,' with 'low' message activity across all three stocks. 

One user said,“That's why EM [Elon Musk] should have stayed out of politics, now you tie your share price to the political landscape.”

Another user said that Musk's critics in a Democratic-led Congress could favor funding and contracts for companies outside his business empire.

View this Stocktwits post

AST buys SpaceX launch services while competing in satellite-based mobile connectivity. Rocket Lab competes with SpaceX for launches and supplies spacecraft and components to government customers, giving the companies different exposure to Musk's political risks. 

A separate user urged investors to hold their positions, citing historically strong market performance in the third year of a presidential term.

View this Stocktwits post

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