SAN FRANCISCO (AP) — Elon Musk was portrayed Wednesday as either a liar who callously jeopardized the savings of “ordinary people” or a well-intentioned visionary when lawyers made opening statements at a lawsuit surrounding the buyout of Tesla, which Did not happen.
Lawyers on opposite sides have painted wildly different portraits of Musk for the nine-member jury that will hear a three-week trial. The case centers on two tweets in August 2018 that the billionaire posted on Twitter, which he now owns.
The tweets indicated that Musk had arranged funding to take Tesla private at a time when the automaker’s stock was falling due to production problems.
The prospect of a $72 billion buyout sent the company’s stock price up, which ended abruptly a week later after it became apparent it didn’t have the funds to go through with the deal after all. He was then sued by Tesla’s shareholders, claiming that Tesla’s stock wouldn’t have fluctuated so much if he hadn’t hatched the idea of buying the company at $420 a share.
Nicholas Porritt, the lawyer representing Glen Littleton and other Tesla shareholders in the class action lawsuit, immediately vilified Musk when addressing the jury.
“Why are we here?” Porrit asked. “We are here because Elon Musk, Chairman and CEO of Tesla, lied. His lies resulted in ordinary people like Glen Littleton losing millions and millions of dollars.”
Musk’s attorney, Alex Spiro, countered that the jump in Tesla stock following the tweet mostly reflects investors’ faith in Musk’s ability to accomplish mind-boggling feats, including building the world’s largest electric car maker as well as running SpaceX, a rocket ship maker.
“Mr. Musk is trying to do something he’s never done before. Everyone knows that,” Spiro told jurors.
Spiro added that Musk was in preliminary talks with representatives of the Saudi Arabian State Investment Fund about the privatization of Tesla.
“He didn’t plan on posting this on Twitter,” Spiro said of Musk’s Aug. 7, 2018 statement at the heart of the lawsuit. “It was an instant decision” aimed at getting discussions with the Saudi Fund about a potential deal.
After saying that “funding for the buyout is secured,” Musk wrote another tweet suggesting a deal was imminent.
Littleton, a 71-year-old investor from Kansas City, Missouri, was the first witness to be called to court. He said Musk’s funding announcement alarmed him because he purchased an investment in Tesla meant to reward him for believing the automaker’s shares would end up worth much more than $420.
He said he sold most of his assets to cut his losses, but still saw the value of his Tesla portfolio drop by 75%.
“The damage has been done,” Littleton complained. “I was in a state of shock.”
Littleton’s frustration escalated in October 2018 when he lashed out at Tesla for late delivery of cars for some of his nieces and nephews. This led him to become the lead investor in the lawsuit.
“I still believe in Tesla. Yes, Littleton said.
During cross-examination, Tesla’s board lawyer repeatedly questioned whether Littleton had legitimate grounds to believe a buyout was imminent, but the investor remained steadfast even as he appeared confused at times.
“The only thing that mattered to me was securing funding,” Littleton testified. “It was such a defining statement.”
Musk’s tweets in 2018 caught the attention of securities regulators, who concluded they were inappropriate and that he was lying. In the settlement, they made him pay $40 million and demanded that he step down as chairman of Tesla.
U.S. District Judge Edward Chen, presiding over the trial, ruled that attorneys for the shareholders could not mention the agreement in the case.
But Chen has already ruled that Musk’s tweet was false, a conclusion that can be invoked throughout the trial without specifically mentioning the judge’s decision. Pollitt took the opportunity in his opening statement, telling the jury that they should assume that Musk’s tweet was false, as allowed by the judge. Spiro shook his head, listening.
The outcome of the trial could influence the jury’s interpretation of Musk’s motives for the tweets. And Musk will have a chance to state his position in front of the jury.
After the trial was adjourned on Wednesday, Porritt told The Associated Press he hopes to call Musk to the stand when the trial resumes on Friday after two other witnesses testify. If the allotted time expires on Friday, Musk is likely to testify on Monday, Porritt said.
Musk’s lead on Twitter, where he gutted staff and alienated users and advertisers, has proved unpopular with current Tesla shareholders, who are concerned that he is devoting less time to the automaker at a time of increased competition.
Those fears contributed to a 65% drop in Tesla stock last year that wiped out more than $700 billion of shareholder wealth — far more than the $14 billion swing that occurred between the company’s high and low stock prices from August 7 to 17. , 2018, the period covered by the claim.
Since then, Tesla shares have split twice, bringing the $420 price quoted in his 2018 tweet to $28 on adjusted data. The stock closed Wednesday at $128.78, compared to the company’s November 2021 peak of $414.50.
After Musk dropped the idea of a Tesla buyout, the company overcame a manufacturing problem, resulting in a rapid increase in car sales, causing its stock to skyrocket and making Musk the richest man in the world until he bought Twitter. Musk has dropped from number one on the wealth list after the stock market’s backlash against his Twitter behavior.
