Tesla and SpaceX shares tumble after Democratic gains in midterm elections

Shares of Elon Musk-led companies fell on Thursday, extending losses that began after Democrats outperformed in the U.S. midterm elections. Tesla Inc. stock dropped up to 12% after a 3.3% decline the previous day, leaving the year-to-date loss at about 24%. SpaceX, the rocket, satellite and AI firm, slid as much as 11% following a 3.8% fall the day before. Together, the two companies have shed roughly $411 billion in market value as of 11:40 a.m. New York time.

"Tesla and SpaceX are just a 2-for-1 special as the market attempts to re-price the risk of a material slowing in data-center buildouts," said Joe Gilbert, portfolio manager at Integrity Asset Management. He added that momentum can drive rapid exits in tech until a bottom is identified.

Democrats secured key positions in Texas, where both companies are headquartered, winning a majority in both chambers of Congress and flipping several statewide offices. The results highlighted criticism of Musk’s political contributions and state tax breaks granted to his businesses.

"Elon Musk is trying to buy this Senate seat in Texas," Texas Senator James Talarico said at a rally, noting Musk’s spending of close to half a billion dollars for Republican candidates. Interactive Brokers chief strategist Steve Sosnick warned that such spending could have consequences if the supported candidates lose.

The declines occurred amid a broader market sell-off affecting AI firms, chipmakers and technology stocks, with the Nasdaq 100 falling as much as 6.4% in its worst intraday move since April 2025. Options traders showed the most bearish stance on Tesla since that month, and SpaceX’s put skew reached its highest level since the company went public in June.

"The market is reacting to a potential slowdown in everything AI related, whether its SpaceX’s super-intelligence segment or Tesla’s autonomous vehicles," said Seth Goldstein of Morningstar.

Musk’s net worth fell by nearly $74 billion to about $790 billion, according to the Bloomberg Billionaires Index, down from a peak of $1.3 trillion after SpaceX’s June IPO. Investors also noted uncertainty around a proposed merger between Tesla and SpaceX, with special committees at both firms reviewing the deal. Bloomberg reported a push to complete the transaction before the Trump Administration ends.

"It’s a political-risk repricing. Investors read the midterm results as the prospect of tougher scrutiny of Musk’s government dealings," said David Wagner, portfolio manager at Aptus Capital Advisors. He added that a less friendly Congress could complicate the merger, though it would not necessarily block it.