Musk-Linked Stocks Plunge After Midterms

Musk-linked stocks plunged as Tesla (TSLA) and SpaceX (SPCX) fell sharply following Democratic gains in the Nov. 3, 2026, midterm elections. Investors weighed potential regulatory scrutiny, possible data center moratoriums, and a more challenging path for a reported Tesla–SpaceX combination.

Market Impact and Political Risks

Tesla shares dropped 5.1% and SpaceX shares declined 5.5% on Nov. 4, 2026, as investors reassessed political and regulatory risks tied to the companies. By 2026-11-05 17:30 ET, Tesla was down about 10.8% and SpaceX about 9.1% for the day, reflecting extended selling after the midterms. Estimates of combined two-day market-value losses ranged from roughly $380 billion to $450 billion, reflecting differing valuation methods and intraday cutoffs.

Democrats gained control of both chambers of Congress and won statewide races in Texas, where Tesla and SpaceX have significant operations and a planned chipmaking venture. The Texas victories included Gina Hinojosa’s win in the governor’s race and James Talarico’s in the state Senate. Campaign-finance data showed Elon Musk spent about $445 million supporting federal races in 2026, a scale linked to increased scrutiny of his businesses.

Analysts warned that state and local Democratic wins could lead to short-term moratoria on data center construction, potentially affecting about 45% of planned U.S. capacity expansion. This introduces uncertainty around the timing of new projects and approvals for cloud and edge infrastructure.

SpaceX’s commercial mix is tied to cloud services, with more than half of its third-quarter sales coming from renting computing capacity. Tesla’s energy unit supplies storage systems used by data-center operators. SpaceX aims to increase data-center capacity from about 1.7 gigawatts at the end of September to as much as 3 gigawatts by year-end 2026 and 13 gigawatts in 2027, which would significantly expand its power footprint.

Congressional correspondence has questioned Starlink’s restriction of service in Ukraine, drawing oversight attention to government contracts, subsidies, and related business ties. Party officials and allied lawmakers plan to examine government contracts, subsidies, cryptocurrency-related activities, and contacts involving Ukraine and Russia, broadening regulatory risks for Musk-linked companies.

Analysts said the election results complicate any reported Tesla–SpaceX combination by increasing regulatory uncertainty around timing and approvals. This could lengthen merger review and affect deal economics if talks proceed toward a possible 2027 transaction.