Ted Cruz and Ron DeSantis warn Democrats will target Elon Musk, as Tesla and SpaceX extend their post-election slide
After a Democratic sweep that included Texas, two of Musk's Republican allies predicted investigations into his businesses. Tesla and SpaceX, which fell more than 3% on Wednesday, were lower again before the bell.
Photo: Jenny Hautmann / Wikimedia Commons (CC BY-SA 4.0)
Elon Musk's companies are having a second rough morning after the midterm elections, and this time the warnings are coming from his own side. Two prominent Republicans, Sen. Ted Cruz of Texas and Florida Gov. Ron DeSantis, said on Wednesday that the new Democratic majorities in Congress would go after Musk and his businesses. Shares of Tesla and SpaceX were lower again in premarket trading on Thursday, according to Benzinga.
Wednesday's damage
Both stocks lagged badly as the rest of the market rallied. Tesla closed at $385.19 on Wednesday, down $13.31, or 3.34%, according to market data. SpaceX fell 3.81% to $135.92 from a prior close of $141.31, MarketBeat reported, with trading volume about 31% above average. The Dow gained 3.03% the same day, its best session since April 2025.
Earlier in the session the losses were deeper. Investing.com reported that SpaceX was down about 5% and Tesla 5.6% at one point on Wednesday morning, as investors weighed the prospect of greater scrutiny of Musk's companies. The Star, citing earlier premarket trading, put the declines at about 5% for Tesla and 6.9% for SpaceX.
What Cruz and DeSantis said
In a long post on Wednesday, Cruz called the Republican defeat a "blue tsunami" and predicted investigations into Trump, his administration and business leaders, according to Benzinga. He said Democrats would "persecute those they perceive to be enemies, especially Elon Musk," and warned that Democratic policies could threaten investment in artificial intelligence infrastructure.
"They're going to go after Elon Musk. I guarantee you they will do that." - Florida Gov. Ron DeSantis, as quoted by Benzinga
DeSantis tied the risk directly to Texas. "Having the Gigafactory and all that there, I think it's gonna be problematic for him because I think the political hostility is very, very strong," he said, according to Benzinga. Tesla is headquartered in Austin, and SpaceX launches rockets from its Starbase site in South Texas.
A costly bet
Musk was the biggest donor of the election cycle. An analysis by The New York Times found he contributed $474 million to Republican candidates in the 2026 midterms, according to The Times of India, while Investing.com, citing reports, put his contributions to Republican causes at nearly $450 million. Democrats won both chambers of Congress, and in Texas they won the Senate race and the governor's office.
The new Texas governor, Gina Hinojosa, has backed a moratorium on new data centers, which matters for SpaceX's plans to build computing capacity in the state, according to Benzinga and The Times of India. Reuters reported that Musk's businesses could also face more scrutiny over government contracts and subsidies. Musk responded on X with a nod to one of his long-term ideas. "Data centers in space looking pretty appealing right now," he wrote, according to CoinDesk.
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The merger question
The election result also adds a new variable to the possible combination of Tesla and SpaceX. Musk said on SpaceX's Oct. 20 earnings call that a merger would be "a good idea," and no terms have been agreed, according to Forbes India. Bloomberg has reported a push to announce a deal in the first half of next year so it could close while Trump is still in office, according to The Star and Investing.com. Investing.com noted that a more hostile political environment could make regulatory approval more difficult.
The selling interrupts a strong run. Tesla shares had climbed about 34% from their late-July low before the election, helped by enthusiasm about Musk's AI ambitions and the prospect of a merger, The Star and Investing.com reported. SpaceX, which listed in June, recently reported revenue growth of 161% and a return to quarterly profitability, according to MarketBeat.
What to watch
The new Congress does not take office until January, so no investigation or policy change has started. The next signals are likely to be any formal statements from Democratic committee leaders, comments from Hinojosa on the timing of a data center pause, and whether Tesla and SpaceX keep underperforming once regular trading opens at 9:30 a.m. ET. For investors, the message from Musk's allies is that the political risk is not going away quickly.
