SAN FRANCISCO (AP) — Elon Musk appeared as a witness Friday to defend a 2018 tweet alleging that he arranged funding to take Tesla private in a deal that was never close to going through.
The tweet led to a $40 million settlement with securities regulators. It also led to a class action lawsuit alleging that he misled investors by subpoenaing him for about half an hour on Friday to testify under oath before a nine-member jury and a full house of media representatives and other viewers.
The trial was then adjourned over the weekend and Musk was told to return on Monday to answer more questions.
In his first booth appearance, Musk defended his many tweets as “the most democratic way” to spread the word, although accepting Twitter’s 240-character limit may make it difficult to be as clear as possible.
“I think you can be absolutely truthful (on Twitter),” Musk said at the booth. “But can you be exhaustive? Of course not,” Musk said.
Musk’s latest headache has been the inherent brevity of Twitter, the service he’s been using since he bought it for $44 billion in October.
The lawsuit hinges on whether a pair of tweets posted by Musk on August 7, 2018 hurt Tesla shareholders in the 10-day period leading up to Musk’s admission that the buyout he foresaw would not happen.
In the first of these two 2018 tweets, Musk said “funding is secured” for a $72 billion buyout of Tesla at a time when the electric car maker was still struggling with production issues and costing far less than it does now. . A few hours later, Musk posted another tweet saying a deal was imminent.
After it became apparent that there was no money to take Tesla private, Musk resigned as chairman of Tesla, remaining CEO as part of the SEC settlement without admitting any wrongdoing.
The impulsive billionaire showed up in court in a dark suit and tie on the third day of a civil suit in San Francisco, when his lawyer unsuccessfully tried to move to Texas, where Tesla is now headquartered, on the grounds that media coverage of his tumultuous takeover of the company by Twitter messed up the jury.
The jury, assembled earlier this week, focused on Musk as he answered questions posed by Nicholas Porritt, a lawyer representing Tesla shareholders. At one point, Musk asked Porritt if he would speak closer to the microphone so he could hear him better. On other occasions, Musk craned his neck as he scanned the courtroom.
Musk, 51, said he cares “very much” about investors and has also spoken out against short sellers who make investments that reward them when the company’s share price falls. He called short selling an “evil” practice that should be outlawed, calling those who profit from it a “bunch of sharks”.
When shown messages from Tesla investors urging him to cut back or completely stop his Twitter habit ahead of the 2018 buyout tweet, Musk said he can’t remember all those interactions from years ago, especially since he’s been getting “Niagara Falls” of emails. letters.
Even before Musk took the stand, U.S. District Judge Edward Chen said the jury could consider the two tweets to be false, leaving it up to them to decide whether Musk intentionally defrauded investors and saddled their claims with losses.
Musk has previously claimed that he entered into the SEC settlement under duress and claimed that he believed he blocked financial support for a Tesla buyout during meetings with representatives of the Saudi Arabian Public Investment Fund.
A corporate buyout expert hired by shareholder lawyers to look into developments surrounding Musk’s Tesla privatization proposal spent most of his three hours on the booth Friday ridiculing the plan as an ill-conceived concept.
“This proposal was an extreme exception,” said Guhan Subramanian, a professor of business and law at Harvard University with more than 20 years of experience. – It was incoherent. It was illusory.”
In a lengthy cross-examination that delayed Musk’s appearance, a lawyer for Tesla’s board of directors attempted to rebut Subramagnan’s testimony, indicating that they relied on the help of graduate students to review some material related to the August 2018 tweets. Lawyer William Price also noted Subramanian’s fee of $1,900 an hour for compiling his case report.
The lawsuit over his Tesla tweets comes at a time when Musk has been focusing on Twitter while also serving as the automaker’s CEO while also remaining heavily involved with SpaceX, the rocket ship company he founded.
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 running 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 fortune swing that occurred between the company’s high and low share prices between Aug. 7 and Aug. 17. . , 2018, covered by a class action lawsuit.
Since then, Tesla shares have split twice, bringing the $420 buyback price quoted in his 2018 tweet to $28 on an adjusted basis. The company’s shares traded around $133.42 on Friday, down from the company’s November 2021 peak of $414.50.
After Musk dropped the idea of a Tesla buyout, the company overcame its manufacturing problems, leading to 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 slipped from number one on the wealth list following the stock market’s backlash against his Twitter handle.
When asked Friday about the challenges Tesla faced in 2018, he recalled spending many nights at the automaker’s California plant trying to keep the company afloat.
“The sheer level of pain to make Tesla successful in the 2017, 2018 period was excruciating,” he recalled.
