Elon Musk
Elon Musk

NEW YORK — Elon Musk's two most valuable companies have lost more than $420 billion in combined market value in the days since Tuesday's U.S. midterm elections, as investors worried about congressional scrutiny and tougher regulation following Democratic gains.

SpaceX and Tesla shares declined by about 9% and 11%, respectively, on Thursday afternoon, with investors concerned that Musk could face new congressional probes and his companies stricter regulation.

The losses deepened by the close. The combined market value decline topped $420 billion since Tuesday's close and reached about $456 billion by the end of Thursday's trading.

Musk's wealth drops

The selloff hit the world's richest person hard. Musk's wealth, which topped $1 trillion after SpaceX's initial public offering in June, has fallen below $800 billion, dropping about $90 billion in the past week, according to Forbes. He remains the richest person on Earth, with a net worth of about $790 billion.

Political backdrop

The election results were a setback for candidates Musk supported. He was the biggest donor to GOP candidates and causes in the midterms, with contributions exceeding $470 million, the Financial Times first reported.

Texas was a particular concern for investors. In Texas, where both companies are headquartered, Democrats Sen.-elect James Talarico and Gov.-elect Gina Hinojosa beat longtime Musk allies Ken Paxton and Greg Abbott.

AI and merger plans at risk

Both companies have major AI infrastructure plans in Texas. They plan Terafab, a large facility in Grimes County that would include a data center and semiconductor factory, and SpaceX also plans a supercomputer at its Starbase launch site.

Analysts flagged regulatory risks. Deutsche Bank wrote in a note, "we could envision SpaceX facing some incremental headwinds in this type of backdrop." The analysts noted Hinojosa made data centers a major campaign issue and called for a moratorium on new approvals.

Musk has also promoted a possible Tesla-SpaceX merger, which would require shareholder approval.

Broader tech selloff

The declines came amid widespread market turmoil. They coincided with a broader technology-sector selloff.

Investors will watch for any signs of congressional action and for regulatory developments in Texas that could affect the companies' expansion plans.