Elon Musk Appears In Court To Defend A Tweet On Tesla Buyout

Elon Musk was called to court on Friday to defend a 2018 tweet in which he claimed to have secured finance for a deal to take Tesla private that never came close to materializing.

A $40 million US settlement with securities regulators was the result of the tweet. A class action lawsuit claiming he deceived investors also followed, bringing him before the court on Friday.

On the third day of a civil trial in San Francisco, the billionaire testified that his lawyer had unsuccessfully requested to relocate there from Texas, where Tesla is now based, on the grounds that jury selection had been influenced by media coverage of his turbulent takeover of Twitter.

The nine-person jury, which was selected earlier this week, will decide whether Mr. Musk’s two tweets on August 7, 2018, which were sent out throughout 10 days leading up to his admission that the proposed purchase of Tesla would not take place, harmed Tesla shareholders.

As part of the Securities and Exchange Commission (SEC) settlement, Mr. Musk resigned as Tesla’s chairman a month later while continuing to serve as the company’s CEO. He did not admit guilt in doing so.

In the first of those two tweets from 2018, Mr. Musk declared “financing secured” for what would have been a $72 billion acquisition of Tesla at a time when the electric vehicle manufacturer was still having production issues and was worth far less than it is now.

Twitter is the “most democratic way” to connect with investors, according to Mr. Musk, who paid $44 billion to acquire the platform last year.

He acknowledged during questioning by Nicholas Porritt, a lawyer for Tesla shareholders in the class-action lawsuit, that “I care a great lot about retail investors.”

Given Twitter’s character restrictions, he did admit that investors may get more information in a typical business filing with securities regulators.

“I think you can absolutely be truthful” on Twitter, Mr Musk said. “But can you be comprehensive? Of course not.”

Before Mr. Musk even testified, US district judge Edward Chen ruled that the jury could consider those two tweets to be lies. This left the jury to decide whether Mr. Musk intentionally misled investors and whether his statements caused them to suffer losses.

Previously, Mr. Musk claimed he was coerced into signing the SEC settlement. He also insisted that during meetings with representatives of Saudi Arabia’s Public Investment Fund, he had thought he had secured funding for a buyout of Tesla.

He has been concentrating on Twitter lately, which he acquired in October after trying to back out of that purchase, as the trial involving his Tesla tweets has occurred at a time when he has been doing so.

Tesla’s present stockholders are apprehensive that Mr. Musk has been spending less time leading the automaker at a time when competition is escalating and are unimpressed by his leadership of Twitter.

These worries led to a 65% drop in Tesla’s stock last year, wiping out more than $700 billion in shareholder wealth, a much larger loss than the $14 billion swing in fortune that occurred between the company’s high and low stock prices during the August 7–17, 2018, period covered by the class-action lawsuit.

Read Also: Elon Musk Makes An 18-month-Commitment Not To Sell Tesla Stock

Since then, there have been two splits in Tesla’s stock, making the $420 buyout price he mentioned in a 2018 tweet worth $28 today. Compared to the company’s split-adjusted top of $414.50 in November 2021, the share price of the corporation was trading at about $133 on Friday.

After Mr. Musk abandoned the idea of a Tesla acquisition, the business overcame its production issues, which led to a sharp increase in car sales. This caused the company’s stock to soar and made Mr. Musk the richest man in the world until he acquired Twitter.

Following the stock market outcry over his management of Twitter, Mr. Musk slipped from the top spot on the wealth list.