Tesla and SpaceX shares fell 3.3% and 3.8%, respectively, on Wednesday after Democratic candidates won Texas’s governor and Senate races. The declines erased nearly $130 billion in combined market value, according to Bloomberg.

The results add political risk for Elon Musk, a major Republican donor whose companies are based in Texas. Democrats’ gains could make it easier for political opponents to scrutinize Musk’s businesses and complicate plans for a possible merger between Tesla and SpaceX, analysts said.

Texas Governor-elect Gina Hinojosa campaigned in part against the unrestricted expansion of data centers. Musk’s companies are also involved in the development of artificial intelligence, while SpaceX earns billions of dollars through U.S. government contracts. A potential combination of Tesla and SpaceX could face regulatory questions.

“The fact that Texas is turning blue creates a new political challenge for Musk, especially considering how much he has invested in making the state the center of his business empire,” said Ivan Feinseth, chief investment officer at Tigress Financial Partners.

Musk joked on X that his “space lasers for election interference” had not worked, adding that “data centers in space seem pretty appealing right now.” Moving operations to another state is another possibility, although analyst Andrew Rocco of Zacks Investment Research said it might not be legally straightforward to halt the companies’ operations.

Tesla and SpaceX shares had gained from different developments before Wednesday’s declines. Tesla rose 34% from its late-July low through Tuesday’s close, with investors encouraged by its AI projects and the prospect of a deal with SpaceX. SpaceX, which went public in June, has a market value of $1.9 trillion, while its shares have been broadly unchanged since its initial public offering.

The merger remains exploratory, and both companies are spending heavily on product development. Plans involving robotaxis, robots and Mars colonies are still years away from supporting the companies’ ambitious revenue goals, the report said. Analysts also warned that a Democratic-controlled Congress could increase scrutiny of a deal, potentially affecting its timing.

Sources: Folha Mercado.