SpaceX and Tesla shares slide about 4% as Musk’s record election spending fails to hold back a Democratic sweep

Shares of SpaceX and Tesla fell in premarket trading on Wednesday after Democrats won a significant victory in the midterm elections³. SpaceX, Musk’s rockets-and-AI company, slumped more than 4%², and both companies were down more than 4% before the open⁶. Earlier, on Robinhood overnight, SpaceX was down 4.8% and Tesla 4.1%⁴. The two stocks took an early hit as the blue wave unfolded on election night⁵.

Musk spent an estimated $445 million this cycle, making him the largest individual donor in modern history, and no one has spent as much for so little payoff, especially in Texas⁷. His political action committee contributed $47m to Ken Paxton’s Senate campaign, and his millions failed to deliver Texas for the Republicans⁸. Just before 1:15am ET, Musk posted on X: “Guess my election-interfering space lasers didn’t work this time”⁷. His record spending failed on election night, and the AI buildout now faces its own political reckoning⁹.

Why it matters to investors

Traders are betting that Democrats will slow the data center buildout⁴. CoreWeave, the neocloud at the center of AI financing fears, was down 3.7% on Robinhood overnight⁴ and was later indicated down 7%¹⁰. Musk’s Texas-based companies were hard hit¹⁰. In Asia, stocks closed mixed as investors braced for heightened US oversight of the AI buildout and of government spending¹¹.

Accounts of the wider stock market differed. One report had stocks and bonds rising, with a Morgan Stanley executive saying markets “like gridlock”¹². Another said the blue wave sent stocks lower¹⁶, and early in the night stocks and the dollar dropped as Democrats posted big early wins¹⁵. Stock futures were mixed by Wednesday morning⁴.

In bonds, Treasury yields fell on optimism that a Democratic-controlled Congress might restrict debt¹¹, as investors weighed questions of fiscal gridlock¹⁴. Interest payments on the national debt now demand more than $1 trillion a year¹⁴. The pound hit a seven-week high against a wilting dollar after the Democrats’ sweeping victory¹³.

What to watch

Democratic control of Congress would increase the potential for legislative gridlock, fiscal brinkmanship and debt-ceiling disputes¹⁵. The current federal government funding package also has an expiry date that now falls to a divided Washington¹⁴. Investors expect the new Congress to tighten scrutiny of the AI industry¹¹.

For Musk, the election may become even more expensive⁶. He also nodded at the Texas governor’s race, won by anti-data center Democrat Gina Hinojosa⁷. How SpaceX and Tesla trade once regular sessions open, and whether the AI infrastructure selling spreads, is the next test of how much political risk is priced into his companies^2,4.