Musk's Midterm Election "Gamble" Fails: $474 Million Goes Down the Drain, $6 Billion in Net Worth Wiped Out Overnight
Source: Jinshi Data
The U.S. midterm elections not only altered Washington's power dynamics but also dealt a blow to billionaire Elon Musk's business empire. After Democrats took control of both chambers of Congress and won key elections in Texas, shares of Musk's companies Tesla and SpaceX came under pressure, reducing his personal wealth on paper by over $60 billion.
Tesla and SpaceX shares dipped approximately 5.7% and 7.6%, respectively, at one point during Wednesday's premarket trading. Based on Musk's ownership stakes in these companies, this market volatility wiped over $60 billion off his net worth. As share prices continue to fluctuate, related valuations may still change.
Casting Nearly $500 Million into Elections, Republicans Face Setback in Texas
In these midterm elections, Musk was among the most significant individual political donors for the Republican Party.
According to statistics compiled by CNBC based on filings with the Federal Election Commission, Musk contributed at least $474 million during the 2026 election cycle, with approximately $224 million directed toward campaigns in Texas, nearly half of the total amount.
Musk heavily backed Republican Senate candidate Ken Paxton and hoped for continued Republican control of Congress and the state government in Texas. However, the final results fell short of his expectations.
Democratic candidate James Talarico won the Texas federal Senate race, while Gina Hinojosa defeated incumbent Republican Governor Greg Abbott.
Texas has long been dominated by the Republican Party and serves as a key commercial hub for Musk's recent expansions. Both Tesla and SpaceX are headquartered in the state, maintaining large-scale manufacturing and infrastructure investments there.
Musk previously relocated from California to Texas, partly due to the state's relatively lenient business regulatory environment.
Consequently, this election not only failed to yield the expected returns on his political investments but could also alter the operational landscape for his two core companies in the future.
Tesla and SpaceX Under Pressure as AI Expansion Faces Policy Uncertainty
Market concerns regarding the election results center primarily on three areas: artificial intelligence investment, government contracts, and corporate regulation.
First, Texas's newly elected governor, Hinojosa, takes a more cautious stance toward large data center projects. She advocates halting approvals for new data center construction until local governments refine regulations regarding electricity and water consumption as well as community interest protections, while also opposing overly favorable tax treatment for major tech corporations.
This could impact the expansion plans of Musk's companies in Texas. Tesla is advancing its AI computing, robotics, and autonomous driving operations in the region, while SpaceX also plans to increase investments in semiconductor and AI infrastructure.
According to Reuters, SpaceX is seeking to accelerate the expansion of its AI computing capabilities, a division that has already become a crucial driver of revenue growth. If approval for data center construction becomes stricter, some projects could face delays, rising costs, and postponed timelines for realizing expected revenues.
Second, with Democrats controlling Congress, the relationship between Musk, his businesses, and the U.S. government may face heightened scrutiny.
Some Democratic lawmakers have previously called for investigations into government contracts awarded to SpaceX, federal workforce reductions overseen by Musk during his leadership of the Department of Government Efficiency, and national security controversies surrounding satellite communication services.
However, increased congressional scrutiny does not mean these contracts will be automatically terminated. Trump retains control of the executive branch along with presidential veto power, and SpaceX's critical role in the U.S. aerospace launch sector may also limit the extent of policy adjustments.
Potential Merger Plan Adds Variables as Investors Reassess Political Risk
The election results may also affect merger plans between Tesla and SpaceX that Musk had previously discussed. According to Bloomberg, the two companies have explored potential merger arrangements, though the deal remains in early stages.
This plan could combine Tesla's autonomous driving and robotics technologies with SpaceX's satellite communications and AI computing operations, creating a significantly larger technology enterprise.
However, with Democrats holding control of both chambers of Congress, major transactions involving mega-tech firms may attract greater political attention. Market observers note that while Congress may not be able to directly block corporate mergers, it can increase transaction uncertainty through hearings, investigations, and policy oversight.
Meanwhile, investors are beginning to reassess Musk's massive capital commitments to AI ventures and whether these projects will ultimately deliver anticipated returns.
Following the election, Musk responded on social media with a joking remark, suggesting that space-based data centers now seem more appealing, a subtle reference to SpaceX's proposed orbital computing facilities amid tightening regulations for terrestrial data centers.
Nevertheless, space-based data centers still face technical and commercial challenges such as heat dissipation, maintenance, and construction costs, making them unlikely to directly replace ground-based facilities in the short term.
Overall, the hit Musk faces this time carries a dual nature.
On one hand, hundreds of millions of dollars in political spending failed to secure the goal of maintaining Republican control; on the other hand, declining stock prices for his two core publicly traded companies further amplified fluctuations in his personal net worth.
For investors, what warrants closer attention is not merely the scale of single-day wealth erosion, but shifts in Texas regulatory policies, the intensity of U.S. congressional oversight, and the outlook for AI capital expenditures.
These factors will determine whether the impact of the midterm elections remains confined to short-term market volatility or further translates into long-term valuation adjustments for Musk's business empire.