Shares of Elon Musk’s two flagship companies continued to slide on Thursday, extending a two‑day sell‑off that follows the recent midterm elections. By the close of trading, Tesla’s stock had lost roughly 14% over the two‑day period, while SpaceX’s privately traded shares were down about 13%.
Election outcome shakes merger hopes
The market’s initial optimism that a Democratic win might boost electric‑vehicle demand quickly gave way to broader worries about the impact of the “blue wave” on Musk’s business empire. Central to the concerns is the long‑rumored merger between Tesla and SpaceX, a catalyst that has buoyed investor sentiment throughout the year.
Ross Gerber, chief executive of Gerber Kawasaki Wealth & Investment Management, said the merger now faces “risk” and could be “hard to complete with so much volatility, high interest rates, and the lack of investment.” Gerber, once a vocal Tesla supporter, has turned into a frequent critic of Musk while maintaining a more positive outlook on SpaceX, a position supported by his firm’s prior stake in X.
Adding to the uncertainty, Democrats could intensify regulatory scrutiny of any merger talks. Reports that Musk recently throttled Starlink service to Ukraine amid the Russia‑Ukraine war have raised the prospect of congressional hearings, further complicating any deal.
Regulatory and political headwinds
Gordon Johnson, chief executive of market‑research firm GLJ Research, echoed Gerber’s concerns, noting that the timing of the merger was originally intended for the first half of 2027, with a closing before the end of the Trump administration. He warned that a merger vote now would occur while Democrats hold subpoena power over issues such as the Starshield‑Ukraine throttling, the cryptocurrency DOGE, and SpaceX’s related‑party financing.
Johnson also highlighted that Musk’s relocation of his companies to Texas could become a liability as the state prepares to install a Democratic governor, potentially ushering in stricter state‑level oversight.
Broader market pressure on tech and data‑center stocks
SpaceX’s decline is part of a wider sell‑off that has hit data‑center operators and AI‑infrastructure firms. The iShares Semiconductor ETF was on track for its worst day since 2020, and the Nasdaq‑100 slipped 6%, triggering a formal correction during Thursday’s session.
Analysts fear that a Democratic‑led Congress may tighten oversight of data‑center activities, a sector that underpins SpaceX’s ambitious AI projects. The blue‑wave election results also swept states that sit at the heart of the AI data‑center boom, notably Texas and Georgia. Texas alone is projected to contribute up to 30% of new data‑center development through 2030.
Combined, the political shift, regulatory concerns, and broader market volatility have created a challenging environment for Musk’s enterprises, casting doubt on the feasibility of the proposed Tesla‑SpaceX merger and putting pressure on both companies’ valuations.
Norman Pearlstine is the Executive Editor and Co-Founder at News Raise. With over two decades of experience across financial journalism, corporate governance, and market analysis, Norman leads the editorial direction and ensures strict adherence to journalistic accuracy and ethics.
