Elon Musk spent a fortune on the GOP’s doomed midterm elections, but his losses are still piling up days later as shares of SpaceX and Tesla plummet.
The rout for Tesla and SpaceX continued for a second day on Thursday, with both stocks slumping in the wake of the blue wave that returned Democrats to power in Congress and the United States.
As of Thursday’s close, Tesla had fallen 14% in two days, while SpaceX had lost about 13%.
The idea that Democrats might be bullish on electric vehicles, and therefore Tesla, was quickly overshadowed by other concerns about what the election outcome might mean for Musk’s business empire.
Thoughts quickly turned to the fate of a possible SpaceX-Tesla merger, a prospect that has been a major bullish catalyst for investors this year.
“I think this merger is now in jeopardy, and I think it will be difficult to pull off with so much volatility, with high interest rates and the lack of investment,” Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, told Business Insider.
Democrats could exert much tighter regulatory control over any merger negotiations, or even force Musk himself to appear before Congress in light of reports that he recently limited Starlink service to Ukraine amid his war with Russia.
Gerber, a former Tesla bull, has become an outspoken critic of Musk, although he maintains a more bullish stance toward SpaceX, a company in which his company has a position through a previous stake in X.
He added that for Musk, who has moved his companies’ headquarters to Texas, the outlook now looks much more strained as the state ushers in a Democratic governor.
Gordon Johnson, CEO of market research firm GLJ Research, agreed that the Tesla-SpaceX merger could be in jeopardy after the midterm elections.
“The problem is timing and control,” he said. “The plan was to be announced in the first half of 2027 and closed while Trump is still in office. Now any merger vote takes place while Democrats hold subpoena power over limiting Starshield/Ukraine, DOGE, and SpaceX related party funding.”
SpaceX shares are also caught in the frenzied selling that hit data center operators and AI infrastructure names on Thursday. The iShares Semiconductor ETF was headed for its worst day since 2020, and the Nasdaq 100 fell 6% in a formal correction during the session.
The fear is that Democrats could increase oversight and regulation of data centers. For SpaceX, this would be a major blow, as the company’s AI ambitions are an important part of its growth thesis. Meanwhile, the blue wave has swept through states that are at the epicenter of the AI data center boom, particularly Texas and Georgia. Texas alone is expected to account for up to 30% of data center development by 2030.
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