- Tesla shares dropped 9.71% and SpaceX shares fell 9.26% in early trading on Nov 5
- Both companies extended losses for a second day despite a broader US stock market rally
- Democrats winning Congress raised concerns over regulatory scrutiny on Musk's businesses
Elon Musk's companies faced another sharp selloff on Thursday, with Tesla and SpaceX shares extending losses for a second consecutive session as investors assessed the business and political implications of the US midterm elections.
Tesla fell 9.71% to $347.79, while SpaceX dropped 9.26% to $123.33 in early trading at 10:29 am GMT on Nov. 5, according to the market data.
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The latest losses followed Wednesday's decline, when Tesla shares fell 5.6% and SpaceX dropped around 5%, even as the broader US stock market rallied.
The selloff has put Musk's political influence and the regulatory exposure of his businesses under fresh scrutiny after Democrats secured control of both chambers of Congress in the US midterm elections.
Musk had spent nearly $450 million supporting Republican political causes ahead of the vote, with a significant portion directed towards Texas. The state is central to his business empire, hosting Tesla's Austin Gigafactory and SpaceX's Starbase operations.
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Democratic victories in key Texas races have raised concerns about potential resistance to new data centres and greater scrutiny of projects linked to Musk's companies.
Another concern for investors is the possibility of a Tesla-SpaceX combination. The proposed tie-up remains at an exploratory stage, but Democratic control of Congress could bring additional scrutiny to the transaction and potentially slow its progress. Analysts have warned that the election outcome adds a political risk premium to both stocks.
The market reaction also came despite a bullish revision from Morgan Stanley. Analyst Adam Jonas raised his SpaceX revenue forecasts to $175 billion for 2027 and $289 billion for 2028, arguing that the company's growth prospects were not fully reflected in its valuation.
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For Tesla, the pressure comes as investors weigh its spending requirements and long-term ambitions in autonomous driving and artificial intelligence against near-term business risks. The latest slide suggests that political uncertainty is becoming an additional factor in valuing Musk's companies.
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