SAN FRANCISCO — Elon Musk took the witness stand Friday to defend a 2018 tweet claiming he lined up funding to take Tesla private in a deal that never came close to happening.
The tweet resulted in a $40 million settlement with securities regulators. It also led to a class action lawsuit alleging he misled investors, dragging him into court for about half an hour on Friday to deliver sworn testimony before a nine-person jury and a room full of media and insiders. other spectators.
The trial was then adjourned for the weekend and Musk was asked to return on Monday to answer further questions.
In his first appearance on the stand, Musk defended his prolific tweets as “the most democratic way” to spread information, even while acknowledging the constraints of Twitter’s 280-character limit it can be difficult to render everything so clear as possible.
“I think you can absolutely tell the truth (on Twitter),” Musk said on the stand. “But can you be exhaustive? Of course not.
Musk’s latest headache comes from the inherent brevity of Twitter, a service he’s run since buying it for $44 billion in October.
The lawsuit hinges on whether a pair of tweets Musk posted on August 7, 2018 harmed Tesla shareholders during a 10-day period prior to Musk’s admission that the takeover he had considered was not going to happen.
In the first of these two tweets from 2018, Musk declared “funding assured” for what would have been a $72 billion takeover of Tesla at a time when the electric carmaker was still struggling with production issues and worth far less than it is now. Musk followed a few hours later with another tweet suggesting that a deal was imminent.
After it became apparent that the money was not in place to take Tesla private, Musk resigned as Tesla chairman while remaining CEO under the Securities and Exchange Commission settlement, without acknowledging any wrongdoing.
The impulsive billionaire showed up in court wearing a dark suit and tie on the third day of the civil trial in San Francisco that his attorney unsuccessfully tried to move to Texas, where Tesla is now headquartered, in assuming that media coverage of his tumultuous takeover of Twitter had tainted the jury pool.
The jury that convened earlier this week focused on Musk as he answered questions posed by Nicholas Porritt, an attorney representing Tesla shareholders. At one point, Musk asked Porritt if he wanted to speak closer to the microphone to hear him better. At other times, Musk craned his neck as he looked around the courtroom.
Musk, 51, said he cares “a lot” about investors and also railed against short sellers who make investments that reward them when a company’s stock price drops. He called short selling an “evil” practice that should be banned, disparaging those who profit from it as “a bunch of sharks”.
When shown communications from Tesla investors urging him to cut back or completely quit his Twitter habit before the 2018 takeover tweet, Musk said he couldn’t remember all of those interactions. years ago, especially since he was getting a “Niagara Falls” email.
Even before Musk took the stand, U.S. District Judge Edward Chen said jurors could consider both tweets false, letting them decide whether Musk deliberately misled investors and whether his statements caused them losses.
Musk has previously maintained that he entered the SEC settlement under duress and maintained that he believes he blocked financial support for a Tesla takeover during meetings with representatives of the Saudi Public Investment Fund. saudi.
A corporate takeover expert hired by shareholder lawyers to study the events surrounding Musk’s proposal to take Tesla private spent most of his three hours on the stand Friday deriding the plan as a poorly conceived concept.
“This proposal was an extreme aberration,” said Guhan Subramanian, a business and law professor at Harvard University for more than 20 years. “It was incoherent. It was illusory.”
In a lengthy cross-examination that delayed Musk’s appearance, a Tesla board attorney tried to undermine Subramanian’s testimony by pointing out that he relied on the help of graduate students to review some of the documents related to the August 2018 tweets. The attorney, William Price, also noted Subramanian’s $1,900-per-hour fee for writing his report on the case.
The lawsuit over his Tesla tweets comes at a time when Musk is focusing on Twitter while serving as the automaker’s CEO and remaining deeply involved with SpaceX, the rocket company he founded.
Musk’s leadership of Twitter – where he’s gutted staff and alienated users and advertisers – has proven unpopular among current Tesla shareholders, who fear he’s spending less time running the automaker at a time where competition intensifies. Those worries contributed to a 65% drop in Tesla shares last year, which wiped out more than $700 billion in shareholder wealth – far more than the $14 billion fortune swing that happened. product between the company’s high and low stock prices from August 7 to 17. , 2018 Class Period.
Tesla shares have split twice since then, making the $420 takeover price quoted in his 2018 tweet now worth $28 on an adjusted basis. Shares of the company were trading around $133.42 on Friday, down from the company’s November 2021 adjusted peak of $414.50.
After Musk dropped the idea of a Tesla takeover, the company overcame its production problems, leading to a rapid recovery in car sales that sent its stock skyrocketing and made Musk the person. the richest in the world until he bought Twitter. Musk fell from the top spot on the wealth list after the stock market backlash to his handling of Twitter.
Asked Friday about the challenges Tesla faced in 2018, he recalled sleeping many nights at the automaker’s California plant as it tried to keep the company afloat.
“The level of pain to make Tesla successful during this 2017, 2018 period was excruciating,” he recalled.