Elon Musk takes the witness stand to defend Tesla buyout tweets

Elon Musk takes the witness stand to defend Tesla buyout tweets

SAN FRANCISCO — Elon Musk was summoned to court on Friday to defend a 2018 tweet that claimed he had lined up financing to take Tesla private in a deal that never came close to happening.

The tweet resulted in a $40 million settlement with securities regulators. He also led a class action lawsuit alleging he misled investors, which landed him in court on Friday.

The mercurial billionaire took the witness stand wearing a dark suit on the third day of a civil trial in San Francisco that his lawyer tried unsuccessfully to move to Texas, where Tesla is now based, on the grounds that media coverage of his tumultuous takeover of Twitter had contaminated the jury pool.

The nine-person jury convened earlier this week will be responsible for deciding whether a pair of tweets Musk posted on August 7, 2018, hurt Tesla shareholders over a 10-day period prior to Musk’s admission that the company purchase that I had planned was not going to happen

A month later, Musk resigned as Tesla’s chairman and remained chief executive as part of the Securities and Exchange Commission settlement without acknowledging any wrongdoing.

In the first of those two 2018 tweets, Musk declared “funds secured” for what would have been a $72 billion purchase of Tesla at a time when the electric carmaker was still grappling with production issues and was worth a lot. less than it is now. . Musk followed up a few hours later with another tweet suggesting a deal was imminent.

Even before Musk took the stand, U.S. District Judge Edward Chen had ruled that jurors can consider those two tweets false, leaving them to decide whether Musk deliberately misled investors and whether his statements caused them losses.

Musk has previously claimed that he entered into the SEC deal under duress and maintained that he believed he had secured financial backing for a Tesla purchase during meetings with representatives of the Saudi Arabian Public Investment Fund.

The trial over his Tesla tweets comes at a time when he has focused on Twitter, which he acquired for $44 billion in October after trying to back out of that purchase.

Musk’s leadership of Twitter, where he has eviscerated staff and alienated users and advertisers, has proven unpopular with current Tesla shareholders, who worry that he has spent less time running the automaker at a time of intensification of competition. Those concerns contributed to a 65% drop in Tesla shares last year that wiped out more than $700 billion in shareholder wealth, far more than the $14 billion turnaround that occurred amid high prices. and lows of the company’s shares during August 7-17. , 2018 period covered in the class action lawsuit.

Tesla’s stock has split twice since then, making the $420 purchase price quoted in his 2018 tweet worth $28 on an adjusted basis now. Shares of the company traded around $133 on Friday, down from the company’s November 2021 split-adjusted peak of $414.50.

After Musk dropped the idea of ​​a Tesla buyout, the company overcame its production woes, resulting in a rapid rebound in car sales that sent its shares soaring and clinched Musk as the richest person in the world. world until he bought Twitter. Musk fell from the top spot on the wealth list after the stock market backlash to his Twitter handling.

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