Elon Musk’s companies Tesla and SpaceX experienced a significant market value decline following the 2026 U.S. midterm elections, losing over $420 billion combined within two days. Shares of Tesla dropped about 11%, while SpaceX shares fell roughly 9%, amid wider technology sector sell-offs. Musk’s personal fortune, which briefly surpassed $1 trillion after SpaceX’s June IPO, has decreased by approximately $90 billion in the past week, though he remains the richest individual globally.

The Democratic Party gained control of both the House and Senate in the midterms, with key victories including Texas flipping blue. This political shift raises concerns among investors about increased congressional scrutiny and tougher regulatory challenges for Musk’s ventures, especially regarding their AI initiatives and potential mergers. Musk was a major supporter of Republican candidates, contributing over $470 million, but most candidates he backed lost, including prominent figures in Texas where both companies are based.

Deutsche Bank analysts warned that the new political landscape could pose incremental obstacles for SpaceX, particularly related to data center regulations. Texas Governor-elect Gina Hinojosa campaigned on limiting data centers, calling for stricter controls on water use, electricity costs, and tax incentives—issues directly impacting Tesla and SpaceX’s plans for massive AI infrastructure projects in the state. SpaceX’s ambitions to expand computing capacity at its Starbase facility may face delays due to anticipated tighter regulatory requirements.

Additionally, Musk and SpaceX have been directed to preserve documents tied to restrictions on a military version of Starlink used in Ukraine, which could lead to further probes. The altered political environment may also jeopardize Musk’s vision of merging Tesla and SpaceX, as heightened government oversight could complicate regulatory approval. By Thursday’s close, the combined market cap losses for Tesla and SpaceX had grown to $456 billion, highlighting investor uncertainty about the companies’ regulatory future.