Dear Fellow Investor,
Good morning. Happy Sunday!
I hope you're enjoying a quiet morning with the family before another big week.
But first, let's talk about the richest man in the world having one of the worst weeks of his life.
The Numbers
In the two days after Tuesday's election, Tesla and SpaceX lost more than $420 billion in combined market value.
On Thursday alone, SpaceX fell about 9%.
Tesla fell about 11%.
Musk's personal fortune topped $1 trillion after the SpaceX IPO in June.
It's now below $800 billion.
He's still the richest man in the world.
But that's a lot of zeros to lose in one week.
For perspective, that $420 billion is more than the entire market value of most companies in the S&P 500.
Gone in two trading days.
Why It Happened
Musk was the single biggest donor to Republican candidates in these midterms.
He put in more than $470 million.
Most of the candidates he backed lost.
Democrats took control of the House and the Senate.
And in Texas — where Tesla and SpaceX are both headquartered — Democrats won both the Senate race and the governor's mansion.
The new Texas governor-elect made data centers a major campaign issue.
She called for a moratorium on new approvals until the state passes stronger protections on water, electricity costs and local control.
So investors did the math.
More congressional probes.
Tougher regulators.
And a home state that's suddenly much less friendly to the giant AI buildout Musk is betting on.
They sold first.
Deutsche Bank put out a note saying SpaceX could face some incremental headwinds in this kind of environment.
That's fair.
But notice the word they chose.
Headwinds.
Not a wall.
Fair Question: Is the Business Broken?
Here's how I think about it.
I always separate the man from the business.
Politics is noise.
It's loud, it's emotional, and it moves stocks in the short term.
But it rarely changes what a business is actually worth.
Did Tesla stop selling cars this week?
No.
Did SpaceX stop launching rockets?
No.
Did the demand for AI computing power disappear?
Absolutely not.
Before I ever buy a stock, I ask four questions.
Do I understand the business?
Am I comfortable with management?
What is the business worth?
And what do I have to pay?
This week didn't change the first three answers much for anyone who already owned these companies.
It only changed the fourth one.
And it changed it in the buyer's favor.
By Friday, SpaceX was up about 7% and Tesla about 5%.
The market was already starting to ask better questions.
That doesn't mean the road ahead is smooth.
Washington can slow things down.
Permits can take longer.
Some projects will get more expensive.
And Musk himself is now a political lightning rod in a way he wasn't a year ago.
I'm not going to pretend that doesn't matter.
It does.
But slower is not the same as stopped.
What I'm Watching
So here's what I'll be keeping an eye on over the next few months.
First, Washington.
A Democratic Congress can call hearings and open probes.
Hearings make headlines.
Headlines move stocks for a day or two.
They rarely change a business for a decade.
Second, Texas.
If the new governor follows through on a data center moratorium, every AI project in the state will have to clear a higher bar.
That matters most for anyone who needs land, water and power fast.
Third, the buildout itself.
This is the one I care about most.
Because the demand for AI computing power doesn't care who won the election.
Every company on earth still wants more of it.
And somebody still has to build it.
Where I'm Looking
When a great builder gets knocked down, I don't look at the headlines.
I look at what he's still building.
I've been doing this for almost 35 years.
Some of the best buys I've ever seen came when a great business got dragged down by a headline that had nothing to do with how it actually made money.
And the biggest thing Musk is building right now is Colossus — his AI supercomputer project.
Wall Street is busy selling anything with Elon's name on it.
That's exactly why I think it's the right time to look past the name.
Because from what I've found, the $1.75 trillion Colossus depends on one company Wall Street has overlooked.
It's not Tesla.
It's not SpaceX.
And it isn't on the front page this week.
While everyone else argues about politics, this company keeps doing the work.
I've put together the full story on who it is and why it matters so much.
Have a wonderful Sunday.
I'll see you Monday.
“The Buck Stops Here,”
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Written by Dylan Jovine