SAN FRANCISCO — Elon Musk took the witness stand on Friday to defend a 2018 tweet that claimed he had arranged financing to take Tesla private, but the deal never ended. Not close to happening.
The tweet led to a $40 million settlement with securities regulators. It also led to a class-action lawsuit accusing him of misleading investors, which brought him to court on Friday.
The mercurial billionaire testified in a dark suit on the third day of his San Francisco civil trial as his lawyers tried unsuccessfully to move to Texas, where Tesla is now headquartered, premised on the media Reports of his tumultuous takeover of Twitter have tarnished the jury.
A nine-person jury formed earlier this week will decide whether two tweets by Musk on Aug. 7, 2018, harmed Tesla shareholders within a 10-day period, before Musk admitted to the acquisition he envisioned. Not so will happen.
A month later, as part of the SEC settlement, Musk resigned as Tesla’s chairman while remaining on as CEO, but he did not admit to any wrongdoing. He has since blasted the agency, saying in a Ted Talk last year that the pressure to solve the case was like holding a gun to his “child’s head.”
In the first of two 2018 tweets, Musk Says “Funds Secured” Tesla was supposed to be bought for $72 billion at a time when the electric car maker was still grappling with production issues and had a market cap that was much lower than it is now.Hours later, Musk followed up with another tweet Hinting that a deal is imminent.
At the booth on Friday, Musk, who bought Twitter for $44 billion last year, downplayed the impact his tweets had on the company’s stock price.
“It’s hard to argue that the stock price has anything to do with the tweet,” he told jurors. “Just because I tweet about something doesn’t mean people believe it or act accordingly.”
Tweeting is the “most democratic way” to communicate with investors, he said.
“I care a lot about retail investors,” he said in response to questions from shareholder attorney Nicholas Porritt.
But he acknowledged that investors could get more detail in traditional corporate filings with securities regulators, given the character limits imposed on Twitter.
“I think you can definitely tell the truth. But can you cover everything? Of course not,” Musk said on Twitter.
Even before Musk testified, U.S. District Judge Edward Chen declared jurors could treat the two tweets as false information, leaving them to decide whether Musk intentionally deceived investors and whether his statements were false. let them suffer losses.
Musk has previously argued that he settled with the SEC under duress and insisted he believed he had locked in financial support for Tesla’s acquisition when he met with representatives of Saudi Arabia’s Public Investment Fund.
Jurors have heard from two investors who allege they lost money betting on Tesla in Musk’s now-infamous Aug. 7, 2018, tweet, as well as a Harvard professor who testified as an expert witness. Saying that Musk’s hasty proposal doesn’t confirm conventional wisdom about the practice of management buyouts.
The trial over his Tesla tweets comes at a time when he has been preoccupied with Twitter, which he bought in October after trying to back out of that acquisition.
Musk’s leadership of Twitter — where he has crippled employees and alienated users and advertisers — has proven unpopular among Tesla’s current shareholders, who fear that the company will continue to struggle amid growing competition. , Musk is spending less and less time managing the automaker. Those concerns contributed to a 65% drop in Tesla’s stock price last year, wiping out more than $700 billion in shareholder wealth — far more than the company’s $14 billion swing in wealth between the highs and lows of its stock price between Aug. 7 and 17. , covered in a class action during 2018.
Since then, Tesla’s stock has split twice, making the $420 purchase price he quoted in a 2018 tweet now worth $28 after adjustments. Shares were trading around $133 on Friday, down from the company’s November 2021 split-adjusted peak of $414.50.
After Musk dropped the idea of buying Tesla, the company overcame production problems that led to a rapid recovery in car sales, sending its stock price soaring and making Musk the richest man in the world until he bought Twitter. Musk fell from the top spot on the wealth list after the stock market backlash over his handling of Twitter.
Musk’s lawyers told the jury in opening statements that while his tweets were rushed and contained technical errors, they accurately conveyed his sincerity about taking Tesla private. Musk believes the short-lived plan to take Tesla private is credible based on his discussions with Saudi Arabia’s sovereign wealth fund.
The trial comes as Musk’s fortune has shrunk from its November 2021 peak of $340 billion. He became the first person in history to lose more than $200 billion while he bought Twitter Inc for $44 billion. Last month, he was toppled as the world’s richest man and Tesla’s shares have plummeted 33 percent since Dec. 1, as the electric carmaker faces increasing competition and a looming recession.
Musk is no stranger to court battles, nicknamed “Teflon Elon” for his ability to escape unscathed. He appeared and won in Los Angeles in 2019 and Delaware in 2021. He also testified in November about his $55 billion Tesla compensation package in the Delaware investor case, which has yet to be decided.
Including material from Bloomberg News