Shares of Tesla cratered for a second straight day, plunging as much as 10% at Thursday's open after falling 3.3% Wednesday, as investors punish the stock for a collision of politics, regulation, and corporate ambition. Tesla and SpaceX have shed over $430 billion in combined market value since the midterm results landed.
For the year, Tesla shares are now down about 22%. The sell-off is not about cars or earnings — it's about whether Elon Musk's political exposure has become a material business risk.
Musk Spent Nearly Half a Billion Dollars and Lost Anyway. Musk put a minimum of $474 million into this year's midterm races, with $224 million going to Texas.
Democrats flipped the Texas governor's mansion and a Senate seat — the state where Tesla and SpaceX are headquartered and where both companies plan massive data-center investments. Wedbush analyst Dan Ives said Musk "needs to find the path forward with Texas now." A hostile home-state government adds real cost uncertainty for factories, permits, and expansion plans.
Congress Can't Kill the Merger — But It Can Bleed It. While Congress cannot stop a merger between SpaceX and Tesla, it could slow it down through extra scrutiny, using investigative and budget tools even without a formal veto over a private deal.
Barclays estimates Musk would control 56% of the combined entity's voting rights, which itself invites congressional inquiry.
The Democrat-controlled Congress has already signaled it wants to investigate Musk's companies. Delay is expensive: every month of uncertainty depresses valuation and distracts management.
The Merger Math Was Already Shaky Before Tuesday. Betting markets assigned just 15% odds to a Tesla-SpaceX merger even before the election. Analysts flagged the proposed all-stock deal, structured at an estimated 24% premium for SpaceX , meaning Tesla shareholders would absorb significant dilution. William Blair analysts wrote that Musk's push for a merger is "all about control, not strengthening his businesses." If the deal collapses, the strategic rationale that bulls used to justify Tesla's premium valuation evaporates.
A Broader Tech Rout Leaves No Floor. The S&P 500 fell about 2.4%, the Dow dropped about 1.6%, and the Nasdaq slid roughly 4%.
Chip stocks fell hardest, and Tesla's drop far exceeded other automakers. With macro headwinds amplifying the political shock, investors face a simple question: is the stock pricing in a visionary conglomerate, or a one-man governance risk? Until the merger timeline and Texas regulatory landscape clarify, the discount is unlikely to close.