The 'Musk selloff' deepens as Tesla and SpaceX combine for $456 billion two-day wipeout

By William Gavin

Investors worry a divided Washington could derail 'Elon, Inc.'

SpaceX CEO Elon Musk has become a major political donor, contributing more than $445 million in the 2026 election cycle.

Call it the "Musk selloff."

Shares of Tesla (TSLA) and SpaceX (SPCX) were down 11% and 9%, respectively, when the market closed on Thursday, underscoring both broader concerns in the technology sector and worries about their business opportunities going forward in the aftermath of the 2026 U.S. midterm elections.

Across the past two trading days, Tesla has erased $216 billion in market capitalization and SpaceX has about $240 billion in value, according to Dow Jones Market Data. That comes out to a roughly $456 billion wipeout.

CEO Elon Musk is feeling the pain alongside the average investor. According to Forbes, Musk's net worth now stands at about $789.5 billion, down 9% on Thursday.

Garrett Nelson, an analyst at CFRA, told MarketWatch that the Democrats' takeover of the U.S. House and Senate in the midterm elections is "compounding" fears around the massive artificial-intelligence spending plans of Tesla and other large technology companies.

Nelson added that concerns are particularly pronounced for companies doing business in states like Texas, where Democrats had major victories, and where SpaceX and Tesla are headquartered. Tesla operates a supercomputing cluster in Texas, though SpaceX's data centers are based in Mississippi and Tennessee.

Several newly elected Democrats, including Texas Gov.-elect Gina Hinojosa, have expressed opposition to new data centers. A few dozen ballot measures related to data centers were put before voters this week, according to Redbud Consulting. But so far, data-center advocates have won just a single measure, the firm said.

That said, Texas Senator-elect James Talarico extended some kind words to Musk, who supported Talarico's Republican opponent, in a recent interview with NBC. He said he is a "big fan" of SpaceX and Tesla and would work with Musk on tech innovation in Texas.

"Nice of him to say that," Musk replied on X on Thursday.

Still, the threat of political opposition could incentivize SpaceX to move more quickly to put data centers in orbit, a goal key to the company's future and valuation, according to KeyBanc analyst Mike Leshock. Musk on Wednesday wrote that space-based data centers were "looking pretty appealing right now."

The tech-heavy Nasdaq-100 NDX was off by 6.4% on Thursday, while the PHLX Semiconductor Index SOX fell 12%. It was the worst-one day decline for both since March 16, 2020, according to Dow Jones Market Data.

Thursday's stock pressure is especially pronounced for companies likely to be impacted by a slower data-center buildout in the U.S., according to Thomas Martin, a portfolio manager at Globalt Investments. He pointed to names like Dell Technologies (DELL) and Seagate Technology (STX), which suffered big losses on Thursday.

Nvidia (NVDA) lost $447 billion in market cap on Thursday, its second largest one-day decline on record, according to Dow Jones Market Data. The semiconductor company Sandisk (SNDK) was the worst-performer in the S&P 500, according to FactSet.

Some of the weakness in Tesla and SpaceX shares is also linked to concerns that there could be greater scrutiny of Musk and his companies, according to experts. Over the past few years, Musk has deepened his ties to President Donald Trump and the Republican Party as a whole.

"The 'Musk selloff' is about the market repricing the risks that come with so much of the investment case being tied to one individual," said Jake Behan, head of capital markets at Direxion. Now, he added, the market has to examine SpaceX and Tesla against a much less favorable political backdrop.

SpaceX is a major government contractor and Musk, who used to lead the so-called Department of Government Efficiency, is working with the Defense Department. Several congressional Democrats have reportedly been preparing for inquiries into Musk.

Musk was also the biggest individual donor in the 2026 election cycle. He spent $445.7 million, most of which went toward supporting Republican candidates, according to OpenSecrets.

Tesla and SpaceX are also in early talks to combine into a company that would likely be heavily controlled by Musk, giving rise to what some have called "Elon, Inc." Both U.S. regulators and members of Congress could have some concerns over a possible deal, which would put Musk's biggest companies under one roof, experts say.

"The bigger issue is the proposed Tesla-SpaceX combination," David Wagner, a portfolio manager at Aptus Capital Advisors, told MarketWatch over email. He added that a "less-friendly Congress makes that path messier, even if it doesn't automatically block it."

-William Gavin

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11-05-26 1643ET