Tesla and SpaceX Slide 5.5% as Markets Rally on Democratic Sweep
Tesla and SpaceX fell more than 5.5% in premarket trading after Democrats swept the midterms, as investors priced in heavier congressional scrutiny of Musk's empire.
By Amara Osei
2 min read
What's News
- TSLA and SPCX both fell more than 5.5% premarket after Democrats took the House and Senate
- S&P futures rose over 1% and Dow futures over 1.4% on the same morning
- TSLA traded near $375.50; SPCX near $133
- Tesla and SpaceX boards are studying a merger, Musk confirmed
- The new Congress is sworn in January 3, 2026
Tesla (Nasdaq: TSLA) and SpaceX (Nasdaq: SPCX) both fell more than 5.5% in premarket trading the morning after Democrats swept the midterm elections and took control of both chambers of Congress — even as the broader market rallied.
S&P futures rose more than 1%, Dow futures climbed more than 1.4%, and the tech-heavy Nasdaq gained nearly 1%. Yet TSLA traded down around 5.5% at roughly $375.50, and SPCX fell more than 5.5% to about $133. Musk's Big Tech contemporaries — Alphabet, Amazon, Apple, Microsoft, Nvidia, and Meta — all traded in the green.
The split tells the story. Investors are betting that a Democratic-controlled Congress will make life harder for Musk's business empire, chiefly through added scrutiny of his companies' dealings and their government contracts.
Why did the election hit Musk's stocks specifically?
Musk spent the last several years making enemies of the Democrats as his political alliances shifted right, according to the source. He became one of the largest donors to the GOP and contributed hundreds of millions to Republican coffers in the midterms alone.
He also ran the Trump administration's Department of Government Efficiency (DOGE) in 2025, which cut funding for numerous programs important to Democrats. He remains the most high-profile critic of the party, frequently attacking Democrats and the left on his social media platform X while embracing the current administration.
That administration has close ties and contracts with Musk's properties, including SpaceX and its Starlink satellite business. SpaceX, for instance, previously won $714 million in upcoming Pentagon launches.
The balance of power shifted beyond Washington, too. Democrats won the governorship and Senate race in Texas — turning the state blue for the first time in decades — and Texas is where Musk relocated his companies.
What does the Tesla–SpaceX merger have to do with it?
The boards of Tesla and SpaceX are studying a prospective merger, Musk has confirmed. That deal sits at the center of investor anxiety.
Kathleen Brooks, research director for brokerage firm XTB, told the Wall Street Journal: "While Congress cannot stop a merger between SpaceX and Tesla, they could slow it down via extra scrutiny."
She added: "There is now a political risk premium attached to both Tesla and SpaceX that could weigh on their share prices."
Premarket trading on Wednesday suggests that premium is already in effect.
What happens next?
The new Congress doesn't take office until January 3, giving Musk and his investors time to digest the results and plan for possible changes. Any increased oversight, in other words, won't arrive immediately — but the market has started pricing it now.
Original: wsj.com
More from Amara Osei
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Senior reporter covering companies, deals and strategy in entrepreneurship, startups and venture funding at Business Bearings.
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