Tesla and SpaceX shares slip after Musk-backed candidates lose races

Stock moves after the election

Quartz reports that Tesla shares fell about 5% and SpaceX stock dropped 6.9% in premarket trading on Wednesday after Democrats won control of Congress in the midterm elections and candidates backed by Elon Musk lost in races around the country. By later morning trading, some of the decline had eased, with Tesla down about 2.5% and SpaceX down about 1%.

What investors are watching

Quartz says investors are weighing the chance of tighter artificial intelligence regulation and uncertainty about a possible Tesla-SpaceX merger, according to Bloomberg. The article also notes that stocks were broadly higher on Wednesday morning, with the Dow Jones Industrial Average up 2%, or 1,045 points, the S&P 500 up 1.25%, and the Nasdaq Composite up 1.3%.

Musk’s election spending and losses

Quartz reports that Musk, who leads both Tesla and SpaceX, spent more than any other donor in the 2026 midterms. MarketWatch said he contributed more than $445 million, while CNBC said his total was at least $474 million, including $224 million in Texas. Musk’s preferred Texas candidates, Republican Senate nominee Ken Paxton and Gov. Greg Abbott, lost, and Democrat James Talarico became the state’s senator-elect. The article says Musk directed a large share of his donations against Talarico.

PAC results and Texas focus

According to Quartz, Musk’s America PAC put nearly $87 million into 44 federal races. As of Wednesday morning, its Republican picks had lost 29 contests and won only three, while 12 races had not yet been called. About 93% of the PAC’s spending went to races Republicans lost.

Possible policy and regulatory questions

Quartz cites AJ Bell investment director Russ Mould as saying the stocks were under pressure mainly because Texas now has a Democratic senator and the state hosts the headquarters and many facilities of both Tesla and SpaceX. The article says Tesla’s main U.S. factory is near Austin and SpaceX launches rockets from Starbase in South Texas. It also says a Democratic Congress could launch inquiries into Musk’s government contracts, his prior work leading the Department of Government Efficiency, and his companies’ ties to Washington, while President Donald Trump still controls executive agencies and can veto legislation. Vikram Rai of First New York told Bloomberg that both stocks face major headline risk under a Democratic sweep and that Democrats could slow a merger, though Congress cannot block one on its own.