Tesla and SpaceX shares drop after Democrats take Congress

Market reaction after the election

According to Українські Національні Новини (УНН), shares of Elon Musk’s Tesla Inc. and Space Exploration Technologies Corp. fell before the U.S. stock market opened on Wednesday, November 4, after Democrats won control of Congress. Bloomberg, as cited by UNN, said Tesla dropped about 5% in premarket trading and SpaceX fell 6.9%. The article said this happened after the scale of the setback for President Donald Trump and his party became clear. It also noted that the declines came even as S&P 500 and Nasdaq 100 futures showed modest gains.

Why investors are worried

UNN reported that the election outcome increased investor concern about Musk’s major companies because he is closely associated with Trump. The article said Musk contributed nearly $450 million to the Republican Party and urged his 240 million followers to vote against Democrats. Bloomberg said the so-called Democratic “blue wave” could bring two main risks for investors: stronger scrutiny of artificial intelligence activities and greater uncertainty around a possible merger between Tesla and SpaceX.

Musk’s comments and the merger question

The article said Musk responded humorously on X, writing, “I guess my space lasers interfering with the election didn’t work this time,” and adding that data centers in space are “looking pretty compelling right now.” UNN also reported that, ahead of the election, Musk and his businesses were already facing several sensitive issues, including competition in artificial intelligence, regulatory questions around a possible mega-merger, and tensions involving access to the military version of Starlink between the United States, Ukraine and Russia.

Texas, valuations, and political risk

Bloomberg, as quoted by UNN, said Democratic gains in Texas were especially significant for Musk because Tesla and SpaceX are based there and he has aligned himself with Republican politicians. AJ Bell investment director Russ Mould said the stock pressure on Wednesday was mainly tied to Texas electing a new Democratic senator, noting that the state hosts the headquarters and many facilities of both companies, including the Colossus 3 data center. The article also said SpaceX earns billions from U.S. government contracts and has traded mostly flat since its IPO in June, with a market value of $1.9 trillion. Tesla shares, meanwhile, have risen 34% since the end of July, when they were at their lowest point, helped by optimism about artificial intelligence work and a possible combination with SpaceX.

Uncertainty over the companies’ outlook

The report said investors were warned before the vote that Democratic control could strengthen oversight of Musk and make the merger harder to complete. Vikram Rai of First New York said Congress cannot block the deal on its own, but Democrats with leverage could slow it down. Bloomberg, citing people familiar with the matter, said there is an effort to announce a Tesla-SpaceX deal by the first half of next year so it can be closed while Trump is still in office. The article added that the stocks have been sensitive to election results before, pointing to Tesla’s surge after Trump’s 2024 reelection and later reversal as Musk’s relationship with Trump worsened and investors grew tired of his work at the Department of Government Efficiency. Mark Hackett of Nationwide Funds Group said that election narratives matter before a vote, but after it, fundamentals and reality take over. UNN said there is still substantial uncertainty because the merger is still only under consideration, both companies are spending billions on development, and plans for robotaxis, robots and Mars colonies remain far from being reflected in earnings reports.