Tesla, SpaceX Lose Over $420 Billion After Midterms as Musk Faces Scrutiny
Tesla and SpaceX shed more than $420 billion in combined market value in two days as Democrats took Congress, with Elon Musk's wealth falling about $113 billion.
Tesla (TSLA) and SpaceX lost more than $420 billion in combined market value over two days after the U.S. midterm elections, as investors priced in new congressional scrutiny of Elon Musk and his companies, according to CNBC.
SpaceX and Tesla shares fell about 9% and 11% respectively on Thursday, bringing aggregate losses since Tuesday's close to over $420 billion, CNBC reported. Tesla shares were down 10.77% in delayed trading at $343.69. Musk's wealth, which had topped $1 trillion after SpaceX's June initial public offering, is now below $800 billion, having dropped about $90 billion in the past week, according to Forbes, as cited by CNBC. Fortune, using the Bloomberg Billionaires Index, put his two-day loss at about $113 billion: $33.5 billion on Wednesday and $79.7 billion on Thursday.
In total, the two companies went from a combined market value of about $3.5 trillion on Tuesday night to about $3.04 trillion on Thursday night, wiping out roughly $456 billion, Fortune reported. SpaceX's market value stood at about $1.68 trillion on Thursday night, about 87% of its level on election night, and Tesla's at about $1.36 trillion, about 86%.
Musk was the biggest donor to Republican candidates and causes in the midterms, with contributions exceeding $470 million, the Financial Times first reported, as cited by CNBC. Fortune estimated his spending at $427.5 million to $483 million. Most of the candidates he backed lost. Democrats won control of both the House and Senate, and in Texas, where both companies are headquartered, Democrats Sen.-elect James Talarico and Gov.-elect Gina Hinojosa defeated longtime Musk allies.
Investors expect Musk and his companies to face probes and steeper regulatory hurdles to their artificial intelligence and merger ambitions, CNBC said. The incoming House Oversight Committee chair, Rep. Robert Garcia, has vowed to investigate corporate corruption, and his spokesperson told Politico on Oct. 20 that Musk's role in the Department of Government Efficiency is something the committee plans to investigate. Sen. Richard Blumenthal sent Musk a letter asking about SpaceX's contracts with the Department of Defense and its ability to restrict Starlink, after reports that Ukraine's military lost access without notice.
Deutsche Bank analysts wrote in a note on Wednesday that SpaceX could face incremental headwinds in this backdrop, noting that Gov.-elect Hinojosa made data centers a major campaign issue and called for a moratorium on new approvals until the legislature passes stronger protections on water use, electricity costs, local control and incentives. Tesla and SpaceX are building out AI infrastructure in Texas and plan a facility called Terafab in Grimes County that would include a data center and semiconductor factory; SpaceX also plans a supercomputer at its Starbase launch facility.
Keith Snyder, senior equity analyst at CFRA Research, told Fortune that Musk has stuck out in government through his donations, the election and his role in DOGE, and that the nail that sticks out gets hammered first. The scrutiny could extend to SpaceX's satellite business, its most consistently profitable segment, according to Fortune.
What remains unclear is how far any new Congress will go, or whether the losses hold. Musk remains the richest person in the world, per Forbes as cited by CNBC. The next dated event to watch is any congressional hearing or regulatory action following the new Congress taking office in January.