Elon Musk will stand before a nine-person-jury in California today and try to explain a series of tweets from 2018 that could cost the Tesla billions. A group of burned Tesla shareholders are suing Musk, and they argue the billionaire misled investors, costing them tens of millions when he published his now infamous “funding secured” tweets announcing he was “considering” taking the company private.
During his testimony Monday Musk tried to pour water on shareholder’s claims that he misled investors, saying he “unequivocally wanted to take Tesla private,” according to Bloomberg. Musk told the jury he met with members of Saudi Arabia’s Public Investment Fund (PIF) two months prior to the fateful “funding secured” tweet. If that deal had gone through, Musk said, the Saudi PIF would have provided less than $10 billion in funds and would have less than a majority stake in a private Tesla. Though that investment never materialized Musk said he believed at the time it was a “done deal.” Musk went on to say he believed he could have secured the funds needed to take Tesla private simply with his shares of SpaceX .
“It’s important for the jury to know that,” Musk said. “Very important.”
Those statements are potentially crucial in supporting Musk’s defense that he did genuinely believe he had funds necessary to take Tesla private. Those statements, however, potentially fly in the face of a previous conversation Musk allegedly had with Saudi investors, where he said he didn’t own enough of Tesla to take it private himself. That conversation, which Bloomberg notes was disclosed in a proposed court filing, was contested by Musk’s attorney, who said it could not be verified.
Must went on to tell the jury that the proposed $420 per share price to take Tesla private was, “not a joke,” and said any connections between it and references to marijuana tropes were purely a coincidence.
Musk previewed the direction he may take in the trial when he briefly took the stand last Friday afternoon. After being grilled about his past tweets, Musk said he thought it was “absurd” to draw connections between his tweets and potential changes in Tesla’s stock price.
“Just because I tweet something does not mean people will believe it or act accordingly,” Musk said.
Prosecutors have no shortage of real-world examples arguing against that point. Musk’s Twitter audience, 126 million followers strong, can often drive mass popularity towards goods or products. Back in 2021, when the CEO was posting more frequently about cryptocurrencies, the valuations of bitcoin, ethereum, and dogecoin would regularly soar upwards or crash immediately following his statements. Outside of crypto, Musk’s tweets have been credited for driving up the stock prices of certain video game developers, like Cyberpunk 2077’s CD Projekt. Musk so far has tried to say he doesn’t see a “causal link” between any of his tweets stocks subsequently rising or falling.
“Tesla stock price goes up and down all the time,” Musk said on Friday.
Tesla shareholders suing Musk say his tweets claiming secured funding led to a brief rise in the company’s stock followed by a precipitous crash when it became clear he had failed to acquire the capital necessary to close the deal. In their lawsuit, the shareholders say Musk’s promise of a mythical private Tesla were “indisputably false” and cost them tens of millions.
Speaking to the jury on the first day of the trial, Musk’s attorney Alex Spiro tried to say his client’s tweets weren’t “lies” as the shareholders suggested, but rather that they simply included some “technical wordsmith inaccuracies.” Musk, his attorney argued, did actually intend to take the company private and claimed Musk’s sloppy tweets were actually caused by his mad rush to inform stakeholders of his intentions in an act of extreme transparency.
“He rushed and in his rushed, reckless state, he tweeted the wrong word choice,” Spiro said. Addressing the jury, he said, “You will come to learn very soon that this was not fraud, not even close.”
The trial occurs during one of the shakiest periods in Tesla’ recent history. Increased competition with legacy carmakers and new upstarts in the electric vehicle space have put the company’s once ironclad grasp of the EV market in jeopardy. Investor doubt over Tesla’s continued dominance led it towards its worst stock performance to date in 2022. Those declines, the Associated Press notes, nuked an estimated $700 billion in shareholder wealth. Musk’s recent chaotic and unpredictable management of Twitter, and its $44 billion dollar price tag, have also reportedly shaken shareholder confidence in the CEO even further.
Musk himself didn’t seem all too confident in the time leading up the trial. Earlier this month, his attorney’s tried to argue that Musk’s past reputation and recent fallout from mass layoffs at Twitter meant the San Francisco based jury would be biased against him. The judge rejected that claim and allowed a jury to be selected, though not before striking down a number of potential jurors who held strong opinions about the CEO. One of those removed juror candidates described Musk as “a little off his rocker.”
Update 01/23/2023 1239: PM: Added details from trial.