Tesla Slides 5.6% and SpaceX 7.6% After Musk's $445 Million Bet Fails

Tesla shares fell 5.6% ahead of the market open Wednesday, while SpaceX stock dropped 7.6%, after Elon Musk's record-breaking political spending failed to stop a Democratic sweep. The billionaire CEO pumped more than $445 million into the 2026 midterm elections — the largest donation total by a wide margin, according to filings — and got little in return.

Most of that money went toward opposing James Talarico, the Texas Democrat who was projected to handily win his U.S. Senate race. Musk attacked Talarico on social media; Talarico hit back on the campaign trail. On Tuesday, the winner declared his victory had "sent a message to every billionaire megadonor — every trillionaire megadonor."

The damage wasn't confined to one race. Democrats took control of both the U.S. House of Representatives and the Senate, according to projections. That's a problem for Musk on three fronts at once.

What does the new Congress change for Musk?

First, the oversight risk is now concrete. Several congressional Democrats were already preparing potential inquiries into Musk ahead of the election, Politico reported last month. Senator Edward Markey of Massachusetts made the mood unmistakable on X on Tuesday, writing about potential hearings for technology executives: "They are going to need to plant new forests for all of the subpoenas we'll be printing."

Second, Musk loses his protective political alignment. He has been an ally of President Donald Trump, and Tesla and SpaceX are exploring a merger. A Democratic Congress with subpoena power and regulatory jurisdiction makes both the merger path and routine approvals harder.

Third, and perhaps most expensive: Texas itself. Both companies are headquartered in the state, run major factories there, and plan to expand — including the Terafab, a chip-making project expected to cost the companies hundreds of billions of dollars. To put that in perspective, the Terafab bill would run hundreds of times what Musk just spent on the entire election.

The data-center problem

Gina Hinojosa, the Democrat projected to be Texas' next governor, and other newly elected leaders have been critical of the U.S. data-center buildout. That matters directly for Musk's infrastructure footprint. Tesla already runs a supercomputing cluster in Texas, while SpaceX operates data centers in Mississippi and Tennessee.

Musk himself signaled where he thinks the pressure points are. "Data centers in space looking pretty appealing right now," he wrote on X, referring to his long-term plan to operate orbital satellites that function as data centers.

Analysts at FxPro warned that Democratic control of the House and Senate could bring tighter regulation of the artificial-intelligence sector. Mizuho analyst Anthony Crowdell told clients that utilities leveraged to the data-center buildout will likely catch a case of the "Blue Flu." Investors in data-center power names such as American Electric Power should expect more volatility, he wrote, because "regulation likely gets slower, not broken."

The practical read

For investors, the morning's sell-off reflects a repricing of political risk rather than a change in either company's fundamentals. Musk converted a fortune — more than $445 million — into essentially zero favorable electoral outcomes, and now faces a Congress with the incentive and the committees to investigate him.

The watch items from here: whether the floated Tesla–SpaceX merger advances under heavier oversight, whether Texas' incoming governor acts on data-center criticism, and how quickly any congressional inquiries materialize. As Crowdell put it, the realistic risk is slowdown, not shutdown — but in a capital-intense business planning to spend hundreds of billions in Texas, slowdown itself carries a price tag.