Tesla and SpaceX shares drop after Elon Musk's election bet backfires

It’s looking like the election might become even more expensive for Elon Musk.

Shares in Tesla and SpaceX fell more than 4% premarket on Wednesday after the Democrats won a string of midterm victories in Texas, where both companies are based.

The Texas results, which saw James Talarico beat Republican nominee Ken Paxton to the Senate seat and Democratic candidate Gina Hinojosa unseat longtime governor Greg Abbott, will be especially painful for Musk.

The Tesla and SpaceX CEO spent roughly $224 million backing Republican candidates in Texas, according to The New York Times, including $158 million in September alone.

Should the share drops for SpaceX and Tesla hold at market open, Musk’s companies could lose more than $140 billion in combined market value.

Musk, who moved SpaceX’s HQ from California in 2024 after criticizing the state’s lawmakers, now faces the prospect of his two public companies once again being regulated by Democratic officials.

Texas is the home of Tesla’s Austin gigafactory, and the company’s robotaxi service operates in multiple cities across the state. SpaceX, meanwhile, launches its Starship rocket from its Starbase facility in Boca Chica, near the Mexican border.

Dan Ives, a Wedbush analyst who is bullish on SpaceX and Tesla, said in a Wednesday note that Musk “needs to find the path forward with Texas now with a Democratic win on both the Senate and Governor race.”

Musk donated at least $446 million to Republican candidates and groups in the run-up to the election and clashed with Talarico, who called out the billionaire in his victory speech on Wednesday.

The world’s richest man reacted to the nationwide tsunami of Democratic victories in the midterm elections on X, writing that SpaceX’s plan to build data centers in space looked “pretty appealing right now.”

“Guess my election-interfering space lasers didn’t work this time,” Musk added.