New York: Elon Musk wasn't on the ballot on Tuesday, but his companies took the hit anyway. Tesla and SpaceX shed roughly $125 billion to $130 billion in combined market value on Wednesday, depending on how the loss is measured, after Democrats won control of Congress and flipped the governor's mansion and a Senate seat in Texas. The two stocks fell even as the wider market rallied.

Few chief executives are as closely tied to President Donald Trump and his party as Musk, the world's richest person. He spent an estimated $446 million to $474 million backing Republicans in this cycle, including about $224 million in Texas, the state where both Tesla and SpaceX are headquartered. Most of the candidates he backed lost.

One point needs care. The $130 billion figure is the fall in the market value of two companies. It isn't Musk's personal loss, since he owns a part of each company, about 11 per cent of Tesla and a large stake in SpaceX. His own wealth fell by a smaller amount, though still by tens of billions of dollars on paper. He remained the world's richest person, at close to $900 billion by one widely followed index on Tuesday.

What happened to the stocks

Both shares were under pressure from the moment trading opened. Tesla fell more than 5 per cent early on, and SpaceX, which listed in June, dropped more than 7 per cent before both recovered part of the loss. By the close the damage was smaller than the opening moves suggested, but still stood out against a strong day for the market.

Tesla slipped a little further in after-hours trading, to about $381. Apple, by contrast, rose more than 6 per cent on its earnings, which shows how company-specific the selling in Musk's stocks was.

The moves also came after a rough October. SpaceX shares had climbed as high as $176.56 earlier that month, then slid on an AI-stock sell-off, taking Musk's fortune down by about $68 billion over the month. Tesla, meanwhile, had gained about 34 per cent from a late-July low before the election-driven pullback.

Why Musk's empire is exposed

Investors pointed to four separate worries, and Texas is at the centre of most of them.

Texas has a new governor

Democrat Gina Hinojosa unseated Republican Governor Greg Abbott, and Democrat James Talarico beat Ken Paxton for a Senate seat. Texas elected its first Democratic governor in more than three decades. That matters because Musk's businesses have leaned on the state: Tesla and SpaceX are both headquartered there, and the two companies have a planned chipmaking venture in Texas.

Hinojosa has a history with Musk. She sued to obtain emails between Musk and Abbott and accused the governor of selling out the state with favourable deals for the billionaire. She also opposed a possible sale of a beachfront state park to SpaceX. In July she said data centres were guzzling up the state's water and electricity, which is awkward for a company planning to expand data-centre capacity at its Starbase complex in South Texas.

Scrutiny in Washington

With Democrats in charge of both chambers, Musk is likely to face investigations into the billions of dollars in government contracts his companies have won since Trump returned to office, and into his role leading the Department of Government Efficiency early in the second term. SpaceX is a major contractor for NASA and the Defense Department. An analysis based on its IPO filing put its share of disclosed Golden Dome missile-defence awards in 2026 at about $6.45 billion of $7.13 billion, roughly 91 per cent. A Democratic senator has already warned of subpoenas.

AI and data centres

SpaceX now houses Musk's AI business. Investors had been pricing in huge growth from AI, and the company told investors before its IPO that it addressed a $28.5 trillion market. Slower approvals for data centres, or tighter AI rules from a Democratic Congress and a Democratic Texas governor, would cut into that story.

A possible Tesla-SpaceX merger

Democratic control of Congress could also bring closer scrutiny of any move by Musk to merge Tesla and SpaceX. Part of the recent rise in Tesla's shares had rested on hopes of merger synergies.

Musk's political bet and his link to Trump

Musk was the largest individual donor of the midterms. Filings and estimates put his giving at somewhere between $446 million and $474 million, the bulk of it to Republican candidates and groups, with about $224 million aimed at Texas. The result was the opposite of what he paid for: Republicans lost Congress, and the two statewide Texas candidates he backed both lost.

His ties to Trump run deep. Musk led the Department of Government Efficiency at the start of the second term, and his fortune has risen with his alignment with the president. One tally puts it at about $195 billion in 2024, $342 billion in 2025 and more than $900 billion this year. He became the world's first trillionaire in June after SpaceX listed at a valuation of about $1.8 trillion, then slipped back below that mark in October as AI stocks fell.

On Election Day Musk posted an appeal to his followers to vote Republican, and has since deleted it. His first public comment after the results was a quip about space: he wrote that data centres in space were looking pretty appealing right now. He didn't explain the remark.

The other side of the story

A one-day fall isn't a verdict on the companies. Analysts quoted after the sell-off described it as investors reassessing political and regulatory risk, not a sign that either business had deteriorated. Tesla's valuation was already stretched, with a trailing price-to-earnings ratio above 400 and a forward ratio near 180, so it didn't take much to shake it. Short sellers, including investor George Noble, used the moment to repeat bearish calls on both stocks. Others are more positive: Morgan Stanley argues SpaceX trades below the broader S&P 500 on its 2028 earnings.

The loss is also on paper. Musk can't sell his SpaceX shares before June 12, 2027, and the same shares were worth much more a few weeks ago than they are today. And a Democratic Congress can't simply cancel contracts or rewrite policy. It can investigate, hold hearings and use its funding powers, but Trump keeps the veto, and the executive branch still awards most government work. Whether investigations amount to more than headlines will decide how much of Wednesday's fall proves lasting.

What to watch next

1. Thursday's open. Whether Tesla holds its after-hours level of about $381 or tests Wednesday's low of $375.50.
2. Committee agendas in January. Which Democratic chairs go after SpaceX contracts, DOGE and Musk's political spending first.
3. Hinojosa's first moves. Her stance on SpaceX's Starbase data centres, the state park sale and her demand for the Musk-Abbott emails.
4. Merger news. Any step toward combining Tesla and SpaceX would now face a harder road.
5. AI approvals. The pace of permits for data centres in Texas and elsewhere.

Frequently asked questions

Did Elon Musk lose $130 billion in a day? No. That figure is the combined fall in market value of Tesla and SpaceX. Musk owns only part of each company, so his personal loss was smaller, though still tens of billions of dollars on paper.

Why did Tesla and SpaceX fall when the stock market rose? Investors worried about investigations, tougher scrutiny of government contracts, possible AI and data-centre rules, and a harder road for a Tesla-SpaceX merger, after Democrats won Congress and Texas.

How much did Musk spend on the midterms? Estimates range from about $446 million to $474 million, mostly for Republicans, including around $224 million in Texas.

Who won the Texas races? Democrat Gina Hinojosa won the governor's race over Greg Abbott, and Democrat James Talarico won the Senate seat over Ken Paxton.

Is Musk still the world's richest person? Yes. His wealth stood near $900 billion at Tuesday's close by one widely followed index and fell afterwards.


 

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