As early results from the US midterm elections started to point toward a decisive win by Democrats, shares of prominent Republican-backer Elon Musk’s companies Tesla Inc. and Space Exploration Technologies Corp. dropped in after-hours trading.
Shares of both companies fell about 1.8% in postmarket trading on Tuesday after Senator Jon Ossoff was projected to win reelection in Georgia in an early call after polls closed. Since then, trading in individual stocks has closed, but the numbers for Democrats have gotten stronger, with Decision Desk HQ projecting the party will take control of both the US House and Senate. Follow 2026 US midterm election results LIVE updates here.
For investors holding shares in either or both of the companies, a so-called blue wave in the midterms will come as a double whammy. It will fan concerns about tighter regulations around artificial intelligence, and also call into doubt a potential merger of the electric vehicle maker and the rocket, AI and satellite giant.
Though Congress can’t single-handedly kill a deal, empowered Democrats may be able to slow it down, said First New York’s Vikram Rai.
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“Both of these stocks have major headline risk if we get a blue sweep,” Rai told Bloomberg in an interview last week.
Tesla shares have rallied 34% since their late-July nadir amid investor optimism surrounding artificial intelligence products and the potential combination with SpaceX.
SpaceX, which vaulted into the ranks of the world’s most valuable companies when it went public earlier this year, rakes in billions of dollars through US government contracts. The stock is largely treading water since its June initial public offering, holding on to a mammoth $1.9 trillion market valuation.
Heading into the midterms, the risk was particularly acute that Musk and his businesses lie at the fault line of several divisive issues: Tesla and SpaceX are forging forward in the AI race, their potential mega-merger raises regulatory questions, and access to a military version of the Starlink satellite service has become a point of tension between the US, Ukraine, and Russia.
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Ahead of voting, market watchers warned that Democratic dominance at the polls could strengthen the party’s ability to scrutinize Musk’s conduct and impede the anticipated tie-up.
Already, Musk has weighed the importance of the US political environment; there’s a push to announce a Tesla-SpaceX deal by the first half of next year so that it can close while Trump is in office, Bloomberg has reported, according to people familiar with the matter.
Few CEOs are as closely tied to US President Donald Trump and MAGA Republicans as Musk. The world’s richest man served as a White House adviser early last year and now co-leads a new Defense Department initiative. In the run-up to the midterms, Musk poured nearly $450 million into GOP coffers and bandied his 240 million X followers against voting for Democrats.
Shares of the former-trillionaire’s companies have proven to be sensitive to election results in the past. After Trump was re-elected in 2024, Tesla stock surged more than 90% over little more than a month. However, the gains unwound as Musk’s relationship with Trump soured and investors grew tired with Musk’s side quest at the Department of Government Efficiency.
Of course, the postmarket stock moves may also prove temporary since even investors who are wary of betting too hard on Musk may also turn out to be reluctant to underestimate him.
Yet plenty of uncertainty will likely linger when it comes to the stocks. The merger remains in an exploratory phase; Tesla and SpaceX are burning through billions of dollars on product development; and plans for robotaxis, robots, and Martian colonies all remain years away from supporting the companies’ income statements.
“Ahead of elections, narratives and emotion are significant factors, but once they are behind us, fundamentals and reality take control,” said Nationwide Funds Group chief strategist Mark Hackett.