Source: Jin10 Finance
The U.S. midterm elections not only changed the power landscape in Washington, but also dealt a blow to the business empire of the world's richest man, Musk. After the Democratic Party won control of both chambers of Congress and won key elections in Texas, the stock prices of Musk's Tesla and SpaceX came under pressure, and his personal wealth shrank by more than $60 billion on paper.
Tesla and SpaceX fell by about 5.7% and 7.6% respectively in pre-market trading on Wednesday. Based on estimates of Musk's equity holdings in the relevant companies, this round of market volatility reduced his wealth by more than $60 billion. As stock prices fluctuate, the relevant valuations may continue to change.
Spending nearly $500 million on election support, Republicans suffer defeat in Texas
In this midterm election, Musk was one of the most important individual political donors to the Republican Party.
According to statistics compiled by CNBC based on filings with the U.S. Federal Election Commission, Musk invested at least $474 million in the 2026 election cycle, of which about $224 million went to Texas-related campaign activities, nearly half of the total.
Musk focused his support on Republican Senate candidate Ken Paxton and hoped that Republicans would continue to control Congress and the Texas state government. But the final results did not meet his expectations.
Democratic candidate James Talarico won the Texas federal Senate election, while Gina Hinojosa defeated incumbent Republican Governor Greg Abbott.
Texas has long been dominated by Republicans and is also a key business base for Musk's recent布局. Both Tesla and SpaceX have their headquarters in the state and have large-scale manufacturing and infrastructure investments there.
Musk previously moved from California to Texas, partly because of the state's relatively relaxed business regulatory environment.
Therefore, this election not only meant that his political investment failed to achieve the expected results, but may also change the future operating environment of the two core companies.
Tesla and SpaceX under pressure, AI expansion faces policy uncertainty
Market concerns about the election results mainly focus on three aspects: artificial intelligence investment, government contracts, and corporate regulation.
First, newly elected Texas Governor Hinojosa takes a more cautious attitude toward large data center projects. She advocates suspending approval of new data center construction projects until local governments improve regulatory rules on electricity, water consumption, and community interest protection, while also opposing excessive tax incentives for large technology companies.
This may affect the expansion plans of Musk's companies in Texas. Tesla is advancing artificial intelligence computing, robotics, and autonomous driving businesses there, and SpaceX also plans to expand investment in semiconductors and AI infrastructure.
According to Reuters, SpaceX is seeking to accelerate the expansion of AI computing power, and its related business has become an important source of revenue growth. If data center construction approvals become stricter, some projects may face delays, rising costs, and postponed realization of expected revenue.
Second, after Democrats control Congress, the relationship between Musk and his companies and the U.S. government may face stricter scrutiny.
Some Democratic lawmakers have previously called for investigations into government contracts obtained by SpaceX, federal staffing cuts during Musk's leadership of the Department of Government Efficiency, and national security controversies involving satellite communication services.
However, increased congressional scrutiny does not mean that relevant contracts will automatically terminate. Trump still controls the executive branch and retains presidential veto power, and SpaceX's important position in the U.S. space launch sector may also limit the scope of policy adjustments.
Potential merger plan adds variables, investors reassess political risk
The election results may also affect the previously discussed merger plan between Tesla and SpaceX. According to Bloomberg, the two companies have explored a potential merger arrangement, but the transaction is still at an preliminary stage.
This plan could combine Tesla's autonomous driving and robotics technology with SpaceX's satellite communications and AI computing businesses to form a larger technology company.
However, as Democrats hold control of both chambers of Congress, major transactions involving giant technology companies may face more political attention. Market participants noted that Congress may not be able to directly block corporate mergers, but can increase uncertainty around transactions through hearings, investigations, and policy oversight.
At the same time, investors have also begun to re-examine Musk's massive capital investment in AI businesses and whether these projects can achieve expected returns in the future.
After the election, Musk responded jokingly on social platforms, saying that space data centers now seem more attractive, alluding to SpaceX's proposed orbital computing facility concept against the backdrop of stricter regulation of ground-based data centers.
But space data centers still face technical and commercial challenges such as heat dissipation, maintenance, and construction costs, and are unlikely to directly replace ground facilities in the short term.
Overall, the impact Musk faces this time is twofold.
On the one hand, hundreds of millions of dollars in political investment failed to achieve the goal of maintaining Republican control; on the other hand, the stock price declines of the two core listed companies further amplified the paper fluctuations in his personal wealth.
For investors, what deserves more attention is not the scale of wealth shrinkage in a single day, but changes in Texas regulatory policy, the intensity of U.S. congressional oversight, and the prospects for AI capital expenditure.
These factors will determine whether the impact of the midterm elections remains short-term market volatility or further transmits to the long-term valuation of Musk's business empire.
