Tesla, SpaceX Sink Another 10% as Democrats Vow Musk Investigations

Tesla and SpaceX both slid roughly 10% Thursday, piling onto Wednesday's losses as the AI trade kept unraveling. The drops came two days after Democrats routed Republicans in the midterm elections, taking both chambers of Congress and flipping several governorships. For SpaceX, Thursday marked its first open below its $135 IPO price since August.

Elon Musk, who runs both companies, was the cycle's biggest individual donor, funneling more than $400 million to Republican candidates nationwide, per earlier reporting. About $200 million of that went to races in Texas, where Tesla and SpaceX are headquartered. It didn't buy him much: Democrats won a majority of the Texas state Assembly, a Senate seat and the governor's office — their first statewide win there since 1994.

Now the incoming majority is promising payback. Incoming House Oversight Committee chair Robert Garcia had a two-word message Tuesday: 'Lawyer up,' according to Reuters. Democrats have pledged investigations that could sweep in President Donald Trump, his administration officials, his family and their business ties, with Musk potentially in the crosshairs over his stint auditing the federal government through the Department of Governmental Efficiency.

The exposure isn't just personal. SpaceX's hefty government contracts and Starlink's role backing Ukrainian military communications could draw congressional scrutiny, while Tesla may face added oversight of its self-driving car business, according to Reuters.

Meanwhile, the money is moving. Goldman Sachs and Apollo Global Management are prepping sales of part of a $40 billion financing deal with SpaceX, which will use the cash to buy AI chips, Bloomberg reported.

Wednesday's damage was lighter — SpaceX slipped nearly 4% and Tesla more than 3% — but it snapped a good run for Tesla, which had climbed 7.4% the week before and had looked like a megacap safe haven thanks to lean AI spending. SpaceX now trades about 16% below its 50-day line, a bearish signal. Not everyone's running: longtime Musk backer Cathie Wood is buying the dip.