Musk Faces Setback as SpaceX and Tesla Stocks Tumble on Midterm Election Results

Elon Musk spent nearly $500 million supporting Republican candidates in the midterm elections. After Democrats claimed sweeping victories, claiming both houses of Congress and other important state races, shares of SpaceX and Tesla, which are both run by Mr. Musk, fell sharply in premarket trading on Wednesday.

Tesla’s stock was down more than 4.5 percent before markets opened, while SpaceX was down 5 percent, dropping below $135, the price it sold shares for in its blockbuster public offering in June. The declines stood out among tech stocks, as Nvidia, Meta, Google and the wider stock market rallied before the official start of trading.

SpaceX and Tesla are exploring a merger, which could be complicated by a Congress controlled by Democrats, some of whom have already signaled their intent to investigate the world’s richest person and his companies. In recent years, Mr. Musk has antagonized Democrats, spending heavily to elect President Trump, involving himself deeply in the federal government and aligning his companies’ interests with those of the current presidential administration.

“They are going to need to plant new forests for all of the subpoenas we’ll be printing,” Senator Edward J. Markey, a Democrat in Massachusetts, posted on X on Tuesday night about potential hearings for technology executives.

Mr. Musk spent at least $474 million on the midterm election, the most money of any donor in a U.S. election cycle, apart from candidates who have funded their own runs for office. About $224 million was spent on races in Texas, particularly in support of the losing campaign of Ken Paxton for a Senate seat against James Talarico.

Both SpaceX and Tesla are headquartered in Texas. During the Covid-19 pandemic, Mr. Musk moved there after declaring that California had become too liberal for his taste.

Both companies are developing extensive infrastructure in Texas, including a joint effort to build a more than $100 billion chip manufacturing plant in the state, though those efforts could now face greater scrutiny. Texas is set to have a Democratic governor after the election of Gina Hinojosa, as well as a Democratic Attorney General and Lieutenant Governor.

Mr. Musk, 55, did not immediately return a request for comment.

Mr. Musk’s midterm spending, while substantial, will have little impact on his overall wealth. As of Tuesday, he was worth $898 billion, according to Bloomberg, meaning that his political contributions amounted to a tiny sliver of his net worth.

In relative terms, it was akin to a 55-year-old with the median U.S. net worth of about $411,000 spending a little more than $217.

Mr. Musk, who avoided posting on X for most of Tuesday night as votes were being counted, returned to his social media platform in the early hours of Wednesday to joke about his political losses and his companies’ prospects.

“Data centers in space looking pretty appealing right now,” he wrote, referring to SpaceX’s goal to put A.I. computing clusters in orbit.

Theodore Schleifer contributed reporting.