Elon Musk’s companies SpaceX and Tesla saw a major fall in stocks following the results of the midterm elections. By Thursday’s closing bell, Tesla had dropped 14% in two days, while SpaceX lost about 13%. While Democrats could be bullish about EVs and therefore Tesla, there have been other concerns about Musk’s business interests.
Investors are worried the two companies and their founder will face increased scrutiny from the new Congress. Democrats have signaled that they would investigate Musk’s involvement with DOGE gutting federal agencies and his potential conflicts of interests, since SpaceX has earned billions from federal contracts. The incoming House Oversight Committee chair Rep. Robert Garcia has vowed to investigate “corporate corruption,” and his spokesperson told Politico on Oct. 20 that Musk’s role in DOGE “is something we plan to investigate.”
The scrutiny would extend to SpaceX’s satellite business, its most consistently profitable segment. Sen. Richard Blumenthal from Connecticut sent a letter to Musk asking about SpaceX’s contracts with the Department of Defense and its ability to restrict Starlink after reports circulated that Ukraine’s military lost access to Starlink without notice. However, Snyder said the brief SpaceX and Tesla selloff was investors having a “knee-jerk reaction” to the election and overestimating the impact Democrats can have on the companies.
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Musk had spent about $446 million on political contributions during the 2026 election cycle, making him the largest individual political donor of the cycle, according to a Washington Post analysis of federal campaign finance filings. Much of the money went to Republican-aligned political groups seeking to preserve the party’s control of Congress.
Musk’s favored Texas candidates, Republican Senate nominee Ken Paxton and Gov. Greg Abbott lost, and Democrat James Talarico became senator-elect. AJ Bell investment director Russ Mould said in a note that the stocks faced pressure “primarily because Texas has a new Democrat senator and that state is home to the HQs and a lot of the facilities of both Tesla and SpaceX,” according to Bloomberg.
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Tesla’s biggest plant is located just outside Austin, while SpaceX sends rockets up from Starbase, its site in South Texas. Democratic Gov.-elect Gina Hinojosa campaigned against corporate subsidies and has urged a halt to the construction of new data centers.
Vikram Rai of First New York told Bloomberg last week that both stocks carry major headline risk in a Democratic sweep. He said Democrats could slow a merger, though Congress lacks the power to end one by itself.
This comes amid talks of a potential merger between Musk’s businesses. Musk said last month that the boards of SpaceX and Tesla had formed special committees to discuss a possible merger. He has described the combination as a potentially beneficial move, although no final agreement has been announced. A potential merger between SpaceX and Tesla could give. Musk majority voting control of the combined company without requiring him to achieve several ambitious performance targets tied to his compensation packages, according to a Reuters analysis.