Musk’s $500M midterm gamble backfires as Tesla and SpaceX shares fall

Tesla and SpaceX shares slide after election results

Tesla and SpaceX shares fell following the election results as investors reacted to the shifting political landscape. SpaceX shares dropped 3.8% and Tesla shares slipped 3.6% in pre-market trading.

On the day after the election results, The Economic Times noted that Tesla fell 3.3% and SpaceX sank 3.8%.

The Motley Fool’s midday snapshot at 1:11 p.m. showed SpaceX down 3.4% after having slid as much as 7% in pre-market trading. At the same time, Tesla was off 2.3% in midday trading.

Musk’s $474 million campaign spending focused on Texas

Federal campaign-finance filings through October 14 identified Musk as the largest individual donor in the midterms, with a total contribution of $445.6 million.

A New York Times analysis indicated that Musk channeled most of his funds into super-PACs backing Republicans, with a specific focus on Texas.

Musk directed roughly $224 million toward Republican candidates in Texas, which included a $158 million expenditure during September alone.

Democrats flip Congress and Texas governorship

This performance represents the worst midterm defeat for the Republican party in 50 years.

The party won 240 House seats and led in dozens more, potentially reaching 260, which is their strongest showing since 1990. They flipped 25 House seats from Republicans, exceeding the 21 seats flipped in 2008.

In the Senate, Democrats won 54 seats against 44 for Republicans, surpassing the 51 seats required for control.

Texas saw significant shifts, with Democrat Gina Hinojosa defeating Governor Greg Abbott. Hinojosa became the first Latina governor of Texas and the first Democratic governor in over three decades.

Democrat James Talarico defeated Republican Ken Paxton in the Texas Senate race.

Congressional committees plan investigations into Musk’s business

SpaceX and Tesla shares fell roughly 4% to 5% on Wednesday following the shift in Congressional control.

SpaceX may face the most direct exposure to this congressional scrutiny. Lawmakers have raised concerns regarding Musk’s alleged role in restricting the company’s Starshield networks.

Senator Richard Blumenthal stated he would investigate Musk and the department if Democrats gained control.

U.S. Representative Zoe Lofgren said Musk and the efficiency department caused chaos and ruined careers. She also attributed the illegal cancellation of grants and the firing of civil servants to their influence.

U.S. Representative Robert Garcia warned Republicans and their allies to hire lawyers.

Democrats in Texas are expected to increase oversight of data-center projects that could affect the growth plans of Tesla and SpaceX.

Hinojosa campaigned on increasing scrutiny of data-center projects and pushing for construction moratoriums due to local anger over electricity costs. Her proposals include removing subsidies for data centers and implementing safeguards against higher electricity and water prices.

She also opposed discussions regarding the sale of a beachfront state park to SpaceX, stating that Texas is not for sale.

Musk’s data-center projects face potential growth hurdles

Musk’s business interests in Texas include Tesla, SpaceX and a planned chip-making venture between the two companies. Democratic control of Congress could slow approvals for SpaceX’s data-centre projects. This presents a potential hurdle for the $28.5 trillion addressable market the company presented to investors.

These facilities are among the world’s largest and rent computing power to customers including Anthropic.

A further jump to 13 GW is planned for next year.

Musk wrote on X after the Politico report, "Live by the sword, die by the sword". He also posted a joke on X referencing a debunked conspiracy about Starlink voting in 2024, saying, "Guess my election-interfering space lasers didn't work this time". He added, "Data centres in space looking pretty appealing right now".

Voter sentiment and market shifts beyond Musk’s companies

The Nasdaq Composite rose about 2% on Wednesday, November 4, 2026, as investors absorbed the election results. US equities historically tend to gain after midterm elections regardless of which party wins. Musk’s companies moved in the opposite direction because the results dealt a blow to Republicans and Donald Trump, a close ally of Musk.

A presidential pardon would cover only federal offenses. The Department of Government Efficiency removed more than 250,000 federal jobs and dismantled USAID.

Trump Media & Technology Group stock was down 24.5 per cent. Nvidia dropped 3.2 per cent, making it the heaviest weight loss on the S&P 500. CoreWeave, a cloud AI-chip rental firm, fell 9.9 per cent.

Clean-energy stocks rose, with the Invesco Solar ETF up nearly 6 per cent, First Solar up 4.6 per cent and Enphase Energy up 3.7 per cent. HCA Healthcare jumped 10.3 per cent and Dollar Tree rose 9.6 per cent.

Experts described Musk as the "Hail Mary for Republicans" in the final stretch.

Talarico’s campaign framed Musk as the face of a corrupt system, and Talarico said money was "no match for the people of Texas".

Salesforce CEO Marc Benioff backed Trump, committing $1 million toward Trump’s White House ballroom and Salesforce making two separate $1 million commitments. Benioff later faced criticism for supporting a National Guard deployment in San Francisco, withdrew his remarks and apologized.