Tesla and SpaceX shares slide as Musk's political push falls flat

By William Gavin

The billionaire spent hundreds of millions of dollars on the U.S. election. Now, investors are worried about less favorable policies under new Democratic officials.

Tesla and SpaceX CEO Elon Musk has been an ally to U.S. President Donald Trump, a Republican.

Investors in Elon Musk's companies appear worried about a less friendly climate for Tesla and SpaceX after his spending in the 2026 midterm elections bore little fruit.

Musk, who leads Tesla (TSLA) and SpaceX (SPCX) as CEO, was the biggest donor in the election by a wide margin, contributing more than $445 million, according to filings. He spent a large chunk of that opposing James Talarico, the Democratic candidate from Texas who was projected to have handily won the race for a Senate seat.

Musk also took aim at Talarico on social media, while the Democrat replied in kind on the campaign trail. On Tuesday, Talarico said his victory "sent a message to every billionaire megadonor - every trillionaire megadonor."

Democrats also took control of both the U.S. House of Representatives and the Senate on Tuesday, according to projections. That may not be great news for Musk, who has been an ally of President Donald Trump and whose companies are exploring a merger. Several Democrats in Congress were preparing for potential inquiries into Musk ahead of the election, Politico reported last month.

"They are going to need to plant new forests for all of the subpoenas we'll be printing," Edward Markey, a Democratic senator from Massachusetts, wrote on X on Tuesday about potential hearings for technology executives.

Tesla shares fell 5.6% ahead of the market open, while SpaceX stock was down 7.6% in recent action on Wednesday.

Both Musk's SpaceX and Tesla are based in Texas, operate major factories and are expected to expand their investments in the state. That includes the Terafab, a massive chip-making project that is expected to cost the companies hundreds of billions of dollars.

Tesla already has a supercomputing cluster in Texas, while SpaceX operates data centers in Mississippi and Tennessee.

"Data centers in space looking pretty appealing right now," Musk wrote in a post on X, referring to his plan to eventually operate orbital satellites that can function as data centers.

Gina Hinojosa, the Democrat projected to be Texas' next governor, and other newly elected leaders have been critical of the U.S. data-center buildout. Analysts at FxPro also warned that Democrats controlling the House and Senate could regulate the artificial-intelligence sector more tightly.

Mizuho analyst Anthony Crowdell said in a client note that utilities leveraged to the data-center buildout will likely catch a case of the "Blue Flu." He warned that investors in data-center power names, such as American Electric Power (AEP), should expect more volatility as "regulation likely gets slower, not broken."

-William Gavin

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