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Tesla and SpaceX shares fell as much as 10% in Thursday trading, extending a slide that began after Democrats won Congress and flipped Texas, on a day when the whole market was falling.

Yahoo Finance reported both stocks down as much as 10% by late morning in New York. Around midday, the Nasdaq Composite was down more than 5% and the S&P 500 more than 4%, led by an 11% drop in the Philadelphia semiconductor index that wiped out Wednesday's post-election rally. Tesla's loss at that point was roughly twice the Nasdaq's.

The selling in Musk's companies began earlier. Both stocks fell about 3% on Wednesday, while the Dow gained about 3%.

Texas, where Tesla and SpaceX are both headquartered, is at the center of the concern, Yahoo Finance reported. Democrat James Talarico won the state's Senate seat, beating Republican Ken Paxton, according to AP data cited by Benzinga. Democrat Gina Hinojosa unseated Gov. Greg Abbott. Musk had been Paxton's biggest donor and had feuded with Talarico on social media before the vote. NBC News reported Musk spent nearly half a billion dollars backing Republican candidates this cycle.

Dan Ives, a managing director at Yorkville, wrote Thursday that a SpaceX–Tesla merger still happens but faces a "much tougher regulatory roadmap" in 2027. He also said data-center build-out growth into 2028 will slow sharply, especially in Texas. Goldman Sachs analysts calculated Wednesday that Democratic wins at state and local level could bring short-term data-center moratoria affecting about 45% of planned US capacity expansion. 24/7 Wall St reported Hinojosa has called for a moratorium on new data-center development.

Musk said on SpaceX's Oct. 20 third-quarter earnings call that a merger would be "a good idea" and that special committees at both companies are weighing a deal. He said no terms have been agreed, and that a deal would need approval from at least 50% of all Tesla shares. SpaceX's capital spending nearly tripled to $19.6 billion in the quarter as it built out AI compute, Reuters reported.

After the Texas results, Musk posted on X that "data centers in space" looked "pretty appealing right now," NBC News reported.

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