Musk’s Tesla and SpaceX shares fell after Democrats gained control of Congress

Shares of Elon Musk’s companies Tesla Inc. and Space Exploration Technologies Corp. fell ahead of the opening of the U.S. stock market on Wednesday, November 4, as Democrats took control of the U.S. Congress, heightening investors’ concerns about the future of the Republican megadonor’s key assets. Bloomberg reports, UNN writes.

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Tesla shares fell about 5% in premarket trading, while SpaceX fell 6.9% "after the scale of the rebuke to President Donald Trump and his party became clear," the publication writes. This compares with modest gains in futures on the S&P 500 and Nasdaq 100 indexes.

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As the publication notes, "few chief executives are as closely linked to the president as Musk, the world’s richest person, who contributed nearly $450 million to the Republican Party’s coffers and urged his 240 million followers to vote against Democrats."

For investors in Tesla or SpaceX, the so-called "blue wave," as commentators call the Democrats’ gains in the midterm elections, will be a double blow, the publication writes. This, it notes, will fuel concerns about tougher regulation of artificial intelligence, as well as create more uncertainty over a potential merger between the electric vehicle manufacturer and the giant in rocketry, artificial intelligence and satellites.

"I guess my space lasers interfering with the election didn’t work this time," Musk wrote in a humorous post on X. "Data centers in space are looking pretty compelling right now."

"Ahead of the midterm elections, the risk that Musk and his businesses found themselves at the center of several contentious issues was particularly acute: Tesla and SpaceX are pulling ahead in the artificial intelligence race, their potential mega-merger is raising regulatory questions, and access to the military version of the Starlink satellite service has become a point of tension between the U.S., Ukraine and Russia," the publication says.

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SpaceX, which joined the ranks of the world’s most valuable companies when it went public earlier this year, earns billions of dollars through U.S. government contracts. The company’s shares have largely been treading water since its initial public offering in June, maintaining a market valuation of $1.9 trillion.

Tesla shares have risen 34% since the end of July, when they reached their lowest level, amid investor optimism about artificial intelligence projects and a potential combination with SpaceX.

Ahead of the vote, market watchers warned that Democratic dominance in the election could strengthen the party’s ability to oversee Musk’s activities and hinder the anticipated merger.

Although Congress cannot scuttle the deal on its own, Democrats with substantial leverage could slow it down, said Vikram Rai of First New York.

"Both of these stocks carry significant risk if we get a blue wave," Rai told Bloomberg in an interview last week.

Musk has already weighed the importance of the U.S. political situation; according to people familiar with the matter, there is an effort to announce a deal between Tesla and SpaceX by the first half of next year so that it can be closed while Trump is in office, Bloomberg reports.

Democratic gains across Texas dealt a particular blow to Musk, who has located Tesla and SpaceX there and aligned himself with Republican politicians, the publication writes.

Tesla and SpaceX shares came under pressure early Wednesday, "mainly because Texas has a new Democratic senator, and the state is home to the headquarters and many facilities of both Tesla and SpaceX, including the Colossus 3 data center," AJ Bell investment director Russ Mould wrote in a note.

Musk’s companies’ stocks have proved sensitive to election results in the past. After Trump’s reelection in 2024, Tesla shares rose by more than 90% in just over a month. However, those gains evaporated as Musk’s relationship with Trump deteriorated and investors grew tired of Musk’s side activities at the Department of Government Efficiency.

As for the stocks, there is still a great deal of uncertainty. The merger remains under consideration; Tesla and SpaceX are spending billions of dollars on product development; and plans for robotaxis, robots, and Martian colonies remain years away from being supported by the companies’ earnings reports, the publication points out.

"Ahead of elections, narratives and emotions are important factors, but once they are behind us, fundamentals and reality take control," said Mark Hackett, chief strategist at Nationwide Funds Group.

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