Tesla and SpaceX shares fall sharply after Democrats win midterm elections

Tesla Inc. and SpaceX saw their stock prices tumble for a second consecutive day on Thursday, with Tesla down about 14% and SpaceX falling roughly 13% since the midterm elections that returned Democrats to control of Congress. Investors had initially hoped the Democratic win might benefit electric-vehicle demand, but concerns shifted to the outlook for a potential merger between the two Musk-led companies.

"I think that this merger is now at risk, and I think that it will be hard to complete with so much volatility and with high interest rates and the lack of investment," said Ross Gerber, chief executive of Gerber Kawasaki Wealth & Investment Management. Gerber, who previously supported Tesla, warned that Democratic oversight could increase scrutiny of any merger talks and that Musk might face congressional inquiries over recent reports of throttling Starlink service to Ukraine.

Gordon Johnson, chief executive of market-research firm GLJ Research, added that the timing and scrutiny of a merger could be problematic. "The plan was to announce in the first half of 2027 and close while Trump is still in office. Now any merger vote plays out while Democrats hold subpoena power over the Starshield/Ukraine throttling, DOGE, and SpaceX's related-party financing," he said.

SpaceX stock also suffered amid broader selling pressure on data-center and artificial-intelligence infrastructure companies. The iShares Semiconductor ETF headed for its worst day since 2020, and the Nasdaq 100 fell 6%, entering a formal correction. Analysts noted that Democrats could impose tighter oversight on data-center operations, a sector tied to SpaceX’s AI ambitions, especially as states like Texas and Georgia—key hubs for data-center growth—were swept by the blue wave.