The Democrats’ victory in the U.S. legislative elections has had immediate consequences for the companies of Elon Musk. Tesla and SpaceX together have lost about €323 billion in stock market capitalization in two sessions, after investors reacted to the new political balance in Washington and the change of government in Texas, where the businessman concentrates a large part of his businesses.
According to data published by Cinco Días, Tesla fell 3.3% on Wednesday and has started this Thursday’s session with a decline of 9.5%. SpaceX, which has been listed on Nasdaq since June, lost 3.8% in the previous trading day and opened with another pullback of 8%.
Taken together, both companies have reduced their market value by approximately $362.5 billion, equivalent to about €323 billion.
Musk loses about €79 billion in personal wealth
The stock market slump has also directly affected the entrepreneur’s fortune. Musk controls about 35% of SpaceX and 11% of Tesla, so the drop in share prices would have reduced the value of his stakes by around $84 billion, about €79 billion.
Investors’ reaction comes after an election campaign in which Musk has maintained direct involvement in favor of the Republican Party. The businessman has allocated close to $450 million to Republican candidacies, including about $205 million in Texas, according to figures collected by Cinco Días.
He also used his social network X to call for a vote against the Democrats.
The Democratic victory in Texas complicates Musk’s political scenario
One of the election results with the greatest implications for the businessman has been Gina Hinojosa’s victory in the Texas governor elections.
Musk moved his residence to the state in 2020 and Tesla’s headquarters in 2021. Since then, he has expanded his investments there, including the large electric vehicle plant located near Austin.
During the campaign, Hinojosa advocated for greater oversight of data centers, essential facilities for the development of artificial intelligence. The possibility of new regulatory requirements worries investors about their consequences for costs and expansion plans of technology companies.
The political change also affects Washington. With Democrats in the lead in Congress, Musk’s companies could face greater scrutiny of their activities, their public contracts, and their artificial intelligence projects.
The possible integration between Tesla and SpaceX, under investors’ attention
Among the projects that could be affected is the eventual integration of Tesla and SpaceX, an operation that has not yet been carried out.
The analysts cited by Bloomberg believe that the new Congress could increase oversight of an operation of this type, especially because of its implications for competition and business concentration.
These uncertainties are added to doubts about some of the businesses that underpin the valuations of Musk’s companies. Robotaxis, humanoid robots, and space projects require high investments and still have significant commercial and technological challenges ahead.
The decline of Tesla and SpaceX contrasts with the evolution of other U.S. electric vehicle manufacturers. Rivian and Lucid have reacted with gains in anticipation that Democrats will favor new measures to support the energy transition.
Musk’s response after the elections
The businessman has reacted to the results with several messages on X. In one of them, he mocked his involvement in the election campaign by saying that his supposed space lasers to interfere in the elections had not worked.
He also suggested that data centers installed in space were starting to seem like an attractive alternative to him.
The retreat of his companies also coincides with a day of heavy losses in Wall Street, where the Nasdaq has fallen by around 5%. Pressure on big tech worsens the punishment in the stock market for Musk’s companies, which now face a political scenario that is less favorable to their interests.