Democratic Midterm Gains Pressure Tesla and SpaceX Shares

Democrats were projected to win control of both the House and Senate in the November 3 midterm elections, according to Bloomberg citing Decision Desk HQ projections. The projected sweep raised concerns about increased regulatory and merger risks for companies tied to Elon Musk.

Tesla shares fell 5% to $378.20 in morning trading after closing at $398.50 in the prior session. SpaceX shares dropped 6% to $133.03 from a previous close of $141.31. Both companies are linked to Musk, who founded SpaceX and serves as Tesla CEO.

“Both of these stocks have major headline risk if we get a blue sweep.”

Legacy automakers moved in the opposite direction. General Motors shares rose 2% to $89.90, while Ford Motor shares also gained 2% to $12.51. The contrasting moves pointed selling pressure directly at Musk’s political exposure.

Bloomberg reported that Tesla and SpaceX first slid after Senator Jon Ossoff was projected to win reelection in Georgia, and selling grew as Democratic gains firmed up. Musk had poured nearly $450 million into Republican coffers ahead of the vote.

Bloomberg also reported a push to announce a Tesla and SpaceX merger by the first half of 2027 so it could close while President Trump remains in office. Talks remain in an exploratory phase, and prediction markets put the probability of an official announcement by June 30, 2027, at 57.5%.

Barclays estimates Musk would control 56% of voting rights in a combined Tesla and SpaceX entity. Vikram Rai of First New York warned that both stocks carry major headline risk if Democrats achieve a blue sweep, and empowered Democrats may be able to slow a deal even though Congress cannot end it single-handedly.