Quick Answer
- SpaceX fell about 5% and Tesla 5.6% on 4 November 2026, as investors weighed what the US midterm results mean for Elon Musk's businesses.
- On the same day, Morgan Stanley's Adam Jonas lifted his SpaceX forecasts to $175 billion in 2027 revenue and $289 billion in 2028.
- The market is pricing a political risk, not a company problem: more congressional scrutiny, and possible delays to a Tesla-SpaceX merger.
Some days in the market look like two different newsrooms filed the same story. This was one of them.
On Wednesday morning, one of Wall Street's best-known analysts was telling clients that SpaceX is far more profitable than anyone had modelled. At the same time, SpaceX and Tesla shares were sliding about 5% while the rest of big tech was green. Same companies, same day, opposite signals.
I have covered enough election nights and earnings seasons to know that markets rarely forgive uncertainty. What makes this one interesting is that the uncertainty has a name and a face: Elon Musk.
What Actually Happened to SpaceX and Tesla Shares
Investing.com reported that SpaceX (Nasdaq: SPCX) dropped about 5% while Tesla (Nasdaq: TSLA) declined 5.6%. Fast Company, writing earlier in the day, had both stocks down around 5.5% in premarket trading, with Tesla near $375.50 and SpaceX near $133.
The contrast with the wider market is what makes the move stand out. At the time of Fast Company's report, S&P futures were up more than 1%, Dow futures more than 1.4% and Nasdaq futures nearly 1%. Alphabet, Amazon, Apple, Microsoft, Nvidia and Meta were all trading higher.
| Item | Reported figure | Source |
|---|---|---|
| SpaceX (SPCX) move | Down about 5% | Investing.com |
| Tesla (TSLA) move | Down 5.6% | Investing.com |
| Premarket prices | TSLA about $375.50, SPCX about $133 | Fast Company |
| Nasdaq futures | Up nearly 1% | Fast Company |
Why Musk's Stocks Fell While Big Tech Rose
The short answer is politics. According to Fast Company, Democrats had a very strong night in the midterms and, per its report, will control both chambers of Congress. Outlets have described the details of the result differently, so check official tallies for the exact seat counts. What every report I read agrees on is the market's reasoning: investors fear more scrutiny of Musk's companies and their government contracts.
Musk was a major Republican donor this cycle, reportedly putting hundreds of millions of dollars behind GOP candidates. Capital Brief reported that roughly half went to Texas, where the candidates he backed for Senate and governor lost. SpaceX and Tesla are both Texas-based. That is a lot of political capital sitting on a very large corporate footprint.
XTB's Kathleen Brooks put the market logic neatly in a note quoted by the Wall Street Journal: Congress cannot block a SpaceX-Tesla merger, but extra scrutiny could slow it. She also described a new “political risk premium” on both stocks. In plain English, traders are asking for a discount to hold them.
One detail worth keeping in perspective: the new Congress isn't sworn in until 3 January. Nothing has been investigated, blocked or subpoenaed yet. Wednesday's drop priced a possibility, not an event.
Morgan Stanley's Numbers: The Bullish Side of the Story
While the stocks sank, Morgan Stanley's Adam Jonas went the other way. Investing.com reported that his team now expects SpaceX to generate $175 billion in revenue in 2027 and $289 billion in 2028. Those are increases of 93% and 84% on the bank's previous forecasts. His 2028 operating income estimate rose 72% to $119 billion.
| Morgan Stanley SpaceX forecast | New estimate | Change vs. earlier estimate |
|---|---|---|
| 2027 revenue | $175 billion | Up 93% |
| 2028 revenue | $289 billion | Up 84% |
| 2028 operating income | $119 billion | Up 72% |
Do the arithmetic and the scale gets striking. Going from $175 billion to $289 billion means roughly $114 billion of extra revenue in a single year, or about 65% growth. A $119 billion operating profit on $289 billion of sales would be a margin of around 41%. Those two figures are my own calculations from the reported numbers, not Morgan Stanley's.
Tech Insider's coverage, which cites the Investing.com report, adds more detail from the same research note: free cash flow turning positive in 2031 instead of 2035, borrowing needs trimmed from about $670 billion to about $390 billion, and a $300 price target against a roughly $140 reference price. I could only confirm those extra points through that secondary report, so treat them with a little more care than the headline figures above.
The AI Argument Behind the Call
The heart of Jonas's case is that investors are giving SpaceX very little credit for its artificial intelligence business. According to Investing.com, he argues the market is valuing mostly the space and connectivity operations, which implies an unusually low valuation for the AI side compared with other infrastructure companies.
Is he right? Honestly, nobody knows yet, and that's the point worth being upfront about. The AI revenue line is the hardest one to model and the one with the widest range of outcomes. Launch and satellite connectivity have known unit economics. AI infrastructure depends on chips, power, permits and customers that haven't fully shown up. When I see a forecast raised by 80-plus percent, my first instinct is to ask which assumption is doing the heavy lifting. Here, it's clearly that one.
The Tesla-SpaceX Merger Question
Musk has confirmed that the boards of both companies are studying a possible combination, Fast Company reported. Nothing has been announced. Tech Insider, citing Bloomberg, says the effort is aimed at an announcement in the first half of next year, which would let a deal close while the current administration is still in office.
That timing is why Wednesday matters. A deal designed around a closing window gets less attractive if review drags past it. Congress doesn't approve mergers, but hearings, letters and public pressure can make a deal slower and costlier. For Tesla, which Investing.com says had climbed about 34% from its late-July lows partly on merger and autonomy expectations, that is a real risk to the story investors have been buying.
Texas, Data Centers and the Next Catalyst
There's a Texas angle too. Tech Insider, relaying Investing.com's report on Barclays analysis, says Texas governor-elect Gina Hinojosa campaigned on pausing new data-center construction until the legislature sets extra requirements. It's a campaign proposal, not law, but it lands directly on the AI infrastructure plans behind the bullish forecasts.
The nearest hardware catalyst is the next Starship flight, expected this month. Per Jonas, SpaceX plans to try catching both the spacecraft and the Super Heavy booster. A clean catch would support the revenue ramp in Morgan Stanley's model. A failure would give skeptics fresh ammunition at the worst possible moment.
My Take: Two Stories, One Stock
Analysts can raise the first number overnight. The second moves only when facts arrive, such as committee chairs, letters, filings and permits. Until then, expect these stocks to swing on headlines. If you follow them, I'd watch the Starship result and any formal merger announcement more closely than any single price target.
Conclusion: What to Watch Next
SpaceX and Tesla fell about 5% on 4 November 2026 because investors started charging a political risk premium on Musk's empire. Morgan Stanley's raised forecasts show how fast Wall Street's earnings models for SpaceX are growing. Both things can be true at once. The checkpoints from here are simple: the Starship catch attempt this month, any formal word on a Tesla-SpaceX deal, and the first moves of the new Congress after 3 January.
Frequently Asked Questions (FAQ)
How much did SpaceX and Tesla shares fall on November 4, 2026?
Investing.com reported SpaceX down about 5% and Tesla down 5.6%. Fast Company saw both around 5.5% lower in premarket trading while the Nasdaq was up nearly 1%.
What did Morgan Stanley forecast for SpaceX?
Analyst Adam Jonas now expects $175 billion of revenue in 2027 and $289 billion in 2028, up 93% and 84% from earlier estimates, with 2028 operating income of $119 billion.
Why did the stocks fall if Morgan Stanley turned bullish?
Investors are worried about more congressional scrutiny of Musk's companies, their government contracts and a possible merger. A long-range forecast doesn't cancel out a near-term political worry.
Are Tesla and SpaceX merging?
Not yet. Musk has confirmed that both boards are studying a possible combination, but no deal has been announced.
Can Congress block a Tesla-SpaceX merger?
Not directly. XTB's Kathleen Brooks said Congress can't stop it but can slow it with extra scrutiny. Regulators and courts decide whether a deal clears.
What is the next big catalyst for SpaceX?
The next Starship flight, expected this month, with an attempt to catch both the spacecraft and the Super Heavy booster.
Is this article investment advice?
No. It's news reporting and analysis for information only. Speak to a registered financial adviser before you invest.
Disclaimer: This article is for information only and is not financial or investment advice. Share prices move quickly; figures reflect reports published on 4 November 2026.