Deutsche Bank Advises Buying the Dip on SpaceX Amid Political Headwinds

After significant Democratic victories in the recent midterm Congressional elections, some Wall Street analysts suggested that Elon Musk could face political retribution risks; however, he is likely to remain protected, presenting a potential buying opportunity for investors in SpaceX. SpaceX shares rose 6% in early Friday trading but declined nearly 13% on Wednesday and Thursday following the November 3 election. Deutsche Bank has characterized the downside risks as more a matter of perception than reality, citing Musk’s near-monopoly in the rocket launch business and the fact that his companies primarily interact with the executive branch, which remains under Republican control. Edison Yu of Deutsche Bank stated in a Friday note that while there are avenues for congressional interference, the vast majority of business dealings occur with executive branch agencies. Yu maintained a buy rating on SpaceX stock with a $250 price target. The traditionally Republican stronghold of Texas turned blue in Tuesday’s gubernatorial election, carrying significant implications for data center development and the broader AI sector, as nearly a third of planned data center capacity is located in Texas. However, Musk is shielded from potential data center obstacles in the state, as most of SpaceX’s computing infrastructure lies outside Texas, with Yu noting that the majority of the company’s compute will be located outside the state by 2027, estimated at 8-10 gigawatts, so this does not impact near-term estimates. Long-time SpaceX supporter Ron Baron, founder and CEO of Baron Capital, defended Musk on CNBC’s “Squawk Box” Friday, noting the criticism Musk faces from newly elected Democrats. Baron observed that many of those elected have spoken negatively about Musk.

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