Elon Musk poured more than $470 million into Republican campaigns during this cycle’s midterm elections, and the market swiftly delivered a verdict on that wager.
With Democrats sweeping the midterms, taking control of both chambers of Congress and flipping Texas blue, investors moved quickly to reprice the political risk embedded in Musk’s corporate empire.
Shares of Tesla (TSLA) dropped roughly 11% and SpaceX fell approximately 9% in Thursday afternoon trading, as concern mounted over potential congressional investigations and tighter regulatory oversight.
By the closing bell Thursday, the combined erosion in market capitalization had reached approximately $456 billion since Tuesday’s close, according to Dow Jones Market Data.
Tesla accounted for around $216 billion of that destruction, while SpaceX’s decline contributed roughly $240 billion to the total.
The selloff also took a personal toll, cutting Musk’s net worth by approximately $90 billion in a single week, pushing his wealth below $800 billion to around $790 billion, according to Forbes.
Musk had previously crossed the $1 trillion net worth threshold following SpaceX’s initial public offering in June, making the reversal all the more stark.
The core investor fear centers on what a Democrat-controlled Congress might do to companies whose chief executive was the single largest donor to the opposition party’s opponents.
Both Tesla and SpaceX have ambitious infrastructure plans in Texas, including a proposed facility called Terafab in Grimes County that would combine a data center with a semiconductor manufacturing plant.
SpaceX also intends to build a supercomputer at its Starbase launch facility, and analysts warn that stricter data center regulations under a Democratic Congress could force costly delays or additional spending.
A long-discussed potential merger between Tesla and SpaceX adds another layer of vulnerability, since any such deal would require shareholder approval and could attract heightened antitrust scrutiny from a newly empowered legislature.
Valuations on both stocks leave little margin for regulatory disruption, with Tesla trading at 159.5 times forward earnings and SpaceX at 48.4 times forward earnings, premium multiples that assume smooth execution.
Bulls on both stocks point to genuine growth catalysts, including Tesla’s robotaxi service, which could significantly expand profitability if it achieves meaningful scale and utilization rates.
SpaceX carries its own momentum, having reached profitability and built out an AI segment under Tesla’s “Super Intelligence” umbrella that has drawn considerable investor enthusiasm.
Both stocks ultimately recovered most of the midterm losses and returned close to their pre-election levels, but the episode laid bare how deeply political exposure has become a shareholder concern for Musk’s companies.
