San Francisco: Elon Musk has appeared in court to defend tweets that Tesla shareholders allege cost them millions in trading losses.
In 2018, Musk tweeted he had secured enough funding to take the electric carmaker private. The funding never materialised and the tweets resulted in a $US40 million ($57 million) settlement with securities regulators. It also led to a class-action lawsuit alleging he misled investors.
Twitter owner and Tesla CEO Elon Musk is testifying in a San Francisco court on Saturday.Credit:AP
The mercurial billionaire took the witness stand in a jury trial on Friday (Saturday AEDT) wearing a dark suit on the third day of the civil proceedings in San Francisco. His lawyer tried unsuccessfully to move the hearing to Texas, where Tesla is now headquartered, on the premise that media coverage of his tumultuous takeover of Twitter had tainted the jury pool.
The nine-person jury assembled earlier this week will be responsible for deciding whether a pair of tweets that Musk posted on August 7, 2018 damaged Tesla shareholders during a 10-day period leading up to a Musk admission that the buyout he had envisioned wasn’t going to happen.
A month later, Musk stepped down as Tesla’s chairman while remaining CEO as part of the Securities and Exchange Commission settlement without acknowledging any wrongdoing.
Documents related to the class-action lawsuit on behalf of investors who owned Tesla stock in August 2018 are loaded onto a cart outside of a federal courthouse in San Francisco.Credit:AP
In the first of those two 2018 tweets, Musk stated “funding secured” for a what would have been a $US72 billion buyout of Tesla at a time when the electric automaker was still grappling with production problems and was worth far less than it is now. Musk followed up a few hours later with another tweet suggesting a deal was imminent.
On the stand, Musk – who last year bought Twitter for $US44 billion with help from a number of investors– said tweeting was the “most democratic way” to communicate with investors.
“Just because I tweet something does not mean people believe it or will act accordingly.
“I care a great deal about retail investors,” he said during questioning by shareholder attorney Nicholas Porritt.
But he acknowledged that investors could get more detail in a traditional corporate filing with securities regulators, given the character limits set on Twitter.
Elon Musk was forced to sell billions of dollars in Tesla shares to help fund his acquisition of Twitter.Credit:AP
“I think you can absolutely be truthful” on Twitter, Musk said. “But can you be comprehensive? Of course not.”
Even before Musk took the stand, US District Judge Edward Chen had declared that the jurors could consider those two tweets to be falsehoods, leaving them to decide whether Musk deliberately deceived investors and whether his statements saddled them with losses.
Musk has previously contended he entered into the SEC settlement under duress and maintained he believed he had locked up financial backing for a Tesla buyout during meetings with representatives from Saudi Arabia’s Public Investment Fund.
The trial over his Tesla tweets come at a time when he has been focusing on Twitter, which he acquired in October after trying unsuccessfully to back out.
Musk’s leadership of Twitter – where he has gutted staff numbers and alienated users and advertisers – has proven unpopular among Tesla’s current stockholders, who are worried he has been devoting less time steering the automaker at a time of intensifying competition. Those concerns contributed to a 65 per cent decline in Tesla’s stock last year that wiped out more than $US700 billion in shareholder wealth – far more than the $US14 billion swing in fortune that occurred between the company’s high and low stock prices during the August 7-17, 2018 period covered in the class-action lawsuit.
Tesla’s stock has split twice since then, making the $US420 buyout price cited in his 2018 tweet worth $US28 on an adjusted basis now. The company’s shares were trading around $US133 on Friday, down from the November 2021 split-adjusted peak of $US414.50.
After Musk dropped the idea of a Tesla buyout, the company overcame its production problems, resulting in a rapid upturn in car sales that caused its stock to soar and minted Musk as the world’s richest person until he bought Twitter. He dropped from the top spot on the wealth list after the stock market’s backlash to his handling of the social media platform.
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