SpaceX (SPCX) Falls 13% After Midterms: Deutsche Bank Says Buy the Dip

SpaceX shares fell nearly 13% across Wednesday and Thursday after the midterms handed Democrats control of Congress. Deutsche Bank now says the drop is a buying opportunity. The market is still deciding whether to agree.

The selloff came even as the broader market jumped on Wednesday. Investors started pricing in political retribution risk for Elon Musk, who spent heavily to help Republicans hold on, and for the companies he runs.

According to CNBC's market coverage, some on Wall Street think Musk faces retribution risk but will likely stay protected, which Deutsche Bank sees as a chance to buy SpaceX (ticker SPCX) after the drop. SpaceX bounced about 6% in early trading Friday.

Investing.com's Russian-language service reported the bank reiterated a Buy rating with a $250 price target, though the full note sits behind a paywall and we haven't seen it directly.

Why did the stock fall in the first place? Business Insider reported that Tesla dropped 14% over the same two days, and that the rout traced to concerns about what a Democratic Washington means for Musk's businesses.

The first worry is oversight. Democrats could hold hearings on reports that Starlink service to Ukraine was throttled, and on SpaceX's government contracts and related-party financing.

The second is data centers. SpaceX's AI ambitions are a big part of its growth story, and Democrats swept gubernatorial races in Texas and Georgia, two states at the center of the data center buildout. Texas alone is expected to host up to 30% of data center development through 2030, per Business Insider.

The third is the rumored SpaceX-Tesla combination, a bullish catalyst for much of this year. Ross Gerber of Gerber Kawasaki said he thinks the merger is "now at risk." GLJ Research's Gordon Johnson agreed on timing.

"The plan was to announce in the first half of 2027 and close while Trump is still in office." — Gordon Johnson, CEO, GLJ Research

Johnson's point is that any merger vote would now play out under Democratic subpoena power. It's a fair concern, and it shows how much of SpaceX's valuation may rest on deal speculation rather than rocket launches.

The bull case runs the other way. Baron Capital's Ron Baron, a SpaceX backer, told CNBC that Musk "hasn't done anything wrong" and that his companies support domestic industrial policy. Baron called Musk probably the only person in the country able to build at scale at attractive prices.

So is it a dip worth buying? That depends on your time horizon. For long-term holders who bought SpaceX for launch, Starlink and defense revenue, a 13% pullback driven by political headlines doesn't change the underlying business. For anyone who bought for the merger story, the thesis just got shakier.

If you're going to add, do it in pieces. Political risk plays out over months through hearings, subpoenas and regulatory reviews, and the stock could stay choppy with every headline. A staggered entry leaves room to buy lower.

Also keep the scale in mind. SpaceX has fallen alongside Tesla, and the group of Musk-linked names tends to move together on political news, so owning both doubles your exposure to the same Washington headline.

It also helps to know what's driving your position. SpaceX has been trading with AI and data center names in the past week, so the Nasdaq's recent correction is as much a factor as Washington.

Key items to watch: any announced congressional hearings on Starlink and Ukraine, signals from Musk or the company about the merger timeline, and whether the AI infrastructure group stabilizes this week after CoreWeave, Cisco and Applied Materials report.

Bottom line: Deutsche Bank sees a discount, Business Insider's sources see a longer list of political risks, and the right answer is probably to buy slowly, if at all.