Blue tsunami sends shares of Elon Musk's SpaceX and Tesla plummeting after he blew $445 million trying to prevent Republican midterm wipeout

READ MORE: Elon Musk warns of worst-case scenario should Democrats take power as he's spent $445 million Updated: 11:51 EDT, 4 November 2026 Shares of Elon Musk's companies Tesla and SpaceX are tanking this morning as the blue tsunami drowns the hopes of the world's richest man.Musk spent nearly half a billion dollars on the 2026 midterms supporting Republican candidates across the country – after working as a key lieutenant of President Donald Trump in the first year of his second administration.Of the $445 million Musk shelled out on the elections, he spent around half in Texas alone – $224 million – to support Senate candidate Ken Paxton and Governor Greg Abbott, both of whom lost their races to Democratic challengers.Shares of Tesla fell nearly six percent this morning, and SpaceX was down more than five percent.The huge declines of both stocks were all the more striking as other big tech stocks – Google, Meta and Nvidia, plus the benchmark S&P 500 stock index – saw decent gains.Besides Musk's flamboyant embrace of a Republican party that has endured a historic midterm loss, there is a more immediate cause for today's big market losses: a potential Tesla-SpaceX merger is in trouble.Musk has confirmed that he wants to combine the two tech giants in a deal valued around $3.5 trillion, but the combination would require approval from both state and federal regulators.Both companies are headquartered in Texas – and the Lone Star state will soon be run by the Democrats he spent hundreds of millions of dollars to keep out of the governor's mansion. Musk, both the world's richest man and the largest donor to US politics in the modern era, has given away over $735 million to primarily Republicans in the last three years 'Texas has just elected its first Democratic governor since 1990 and its first Democratic senator since 1988, and both support tighter regulation,' former Goldman Sachs analyst Nic Puckrin told the Daily Mail.Ironically, both Tesla and SpaceX relocated their corporate headquarters to Texas from California – in 2021 Tesla relocated from Palo Alto to Austin, and in 2024 SpaceX moved from Hawthorne to Starbase, Texas.Newly elected Texas Governor Gina Hinojosa has been sharply critical of Musk's growing influence in Texas, particularly his business dealings with outgoing Governor Greg Abbott.She has criticized the Texas state government for giving Musk preferential treatment at taxpayers' expense, including the public subsidies his companies receive and SpaceX's plans around Boca Chica Beach.Just last month, Hinojosa condemned discussions about selling 1,300 acres of public land in South Texas, including Boca Chica State Park, to SpaceX.And Musk's plans to combine the two companies would be likely challenged by a Congress controlled by Democrats. Party leaders have been open about their plans to investigate Musk and his companies.'They are going to need to plant new forests for all of the subpoenas we'll be printing,' Democratic Massachusetts senator Edward Markey posted on X last night. Donald Trump faced a staggering loss in the midterms, and that's bad news for Elon Musk's potential merger of SpaceX and Tesla.Musk took to X to joke about the election and his companies' prospects this morning.'Guess my election-interfering space lasers didn't work this time,' he wrote. 'Data centers in space looking pretty appealing right now,' wrote Musk, regarding his plans to place AI computing resources on satellites in space.Wall Street analysts expect a SpaceX-Tesla tie-up would be an all-stock transaction that would involve SpaceX effectively acquiring Tesla.One scenario discussed by Barclays would give Tesla shareholders around 0.7 SpaceX shares for every Tesla share, while Musk could ultimately hold roughly 37 percent of the combined company and around 56 percent of its voting power.But getting there would be anything but straightforward, with both companies facing shareholder and regulatory hurdles before a merger could become reality.