Tesla shares fell 10% and SpaceX shares declined 7.5% after the Democratic Party gained control of Congress in the United States following the midterm elections. Investors are concerned about increased regulatory scrutiny of Elon Musk’s federal contracts and potential complications for a merger between the two companies. Following the decline, Tesla shares are down 14% so far in 2026. The probability of a merger announcement by December 31 is now priced at 9.5%, suggesting that investors doubt the financial health of the two companies. Statements from Elon Musk and the companies’ boards, as well as further political and regulatory developments, could influence market perceptions.
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