Tesla and SpaceX Lose $469B in Two Days as Texas Turns Blue

What triggered the selloff

The midterm results, not an earnings miss, did the damage.

Democrats pulled off an unexpected victory in Texas and took a majority in the U.S. Congress. Markets read that as a direct threat to the deregulatory environment Musk's companies have leaned on for years — from Texas's light-touch tax regime to the permissive rules around AI data centers.

The reaction was brutal and fast. Tesla slid 3.3% on Wednesday before accelerating to a 10.77% drop on Thursday. SpaceX fell 3.8% and then 9%. Together the two companies shed close to $469 billion, or roughly €417 billion, in two sessions.

Because Musk holds about 35% of SpaceX and 11% of Tesla, the paper hit to his personal wealth lands near $189 billion (€170 billion). That is a staggering number even by Musk standards, and it explains why the story moved well beyond the business pages.

Why Texas matters so much to Tesla and SpaceX

Texas is not a side office. It is the center of Musk's operations.

Musk moved his residence to Texas in 2020 and relocated Tesla's headquarters there a year later, after clashing with California authorities during the pandemic. His largest U.S. factory sits near Austin, and SpaceX is headquartered in the state too.

Now Texas has a Democratic governor, Gina Hinojosa, who campaigned on greater control over data centers — the very infrastructure underpinning Musk's AI ambitions. "Texas becoming a Democratic state creates a new political challenge for Musk, especially considering how much money he has invested in making it the center of his business empire," Ivan Feinseth, chief investment officer at Tigress Financial Partners, told Bloomberg.

Musk put real money behind the old order: roughly $450 million to Republican candidates, with about $205 million of that going to Texas races. He also used X to openly urge voters against the Democrats. His post-election response was characteristically dry — "Guess my space lasers for interfering with the election didn't work this time" — followed by a line about data centers in space starting to look appealing.

The merger question and the rest of the EV sector

A Democratic Congress could complicate the one deal analysts were already watching.

A potential Tesla-SpaceX merger remains preliminary, but analysts believe Democratic control of Congress raises the political and regulatory scrutiny any such deal would face. Add doubts about robotaxis, humanoid robots and Mars timelines, and the valuation story gets harder to defend.

The split in the EV sector was immediate. Rivian and Lucid gained as investors bet a Democratic majority will push policies favorable to the energy transition. Tesla's loss was their gain, at least on the screen.

The broader context is a market already jittery about tech valuations. The Nasdaq recently lost $2.5 trillion as AI hardware stocks got crushed, and Big Tech's hidden AI debt has climbed past $3.2 trillion. Musk's companies are not isolated from that mood — they are just the most concentrated bet on one man's political capital.

What it means for investors in the US, UK and EU

For US investors, the election result is a direct signal on regulation: a Democratic Congress is expected to take a harder line on AI oversight and data center buildouts, both central to Musk's long-term plans. UK and EU holders of Tesla shares face the same repricing, with the added currency swing of a dollar-denominated loss translated into euros and pounds.

SpaceX remains private, so retail investors can't buy it directly, but its valuation ripples through funds holding secondary stakes and through the wider tech-heavy indices. The next catalyst is any concrete signal on the Tesla-SpaceX merger or new data center rules in Texas.

Two days wiped out nearly half a trillion dollars of paper value, and the cause was a ballot box, not a balance sheet. Musk's empire is now priced with politics baked in. The next few months of regulatory signals from Washington and Austin will decide whether this was a shock or a repricing.