Elon Musk takes the witness stand to defend Tesla takeover tweets
SAN FRANCISCO (AP) — Elon Musk took the witness stand Friday to defend a tweet from 2018 in which he claimed he arranged funding to take Tesla private in a deal that never came close.
The tweet resulted in a $40 million settlement with securities regulators. It also sparked a class action lawsuit alleging he misled investors, dragging him into court for about half an hour on Friday to give sworn testimony before a nine-member jury and a roomful of media and insiders. other spectators.
The trial was then adjourned for the weekend and Musk was asked to return Monday to answer further questions.
In his first appearance on the stand, Musk defended his prolific tweets as “the most democratic way” to disseminate information, even though he acknowledged the limitations of Twitter’s 280-character limit, it can be difficult to put everything as clearly as possible.
“I think you can absolutely tell the truth (on Twitter),” Musk said in the stands. “But can you be exhaustive? Of course not.”
Musk’s latest headache comes from the inherent brevity of Twitter, a service he’s been running since buying it for $44 billion in October.
The lawsuit hinges on whether a pair of tweets Musk posted on Aug. 7, 2018, harmed Tesla shareholders during a 10-day period prior to Musk’s admission that the acquisition he had been considering would not happen.
In the first of these two tweets from 2018, Musk said “Guaranteed Financing” for what would have been a $72 billion Tesla takeover at a time when the electric car maker was still struggling with manufacturing issues and worth far less than it is today. Musk followed suit a few hours later with another tweet suggesting that a deal was imminent.
After it became clear that the money was not there to take Tesla private, Musk resigned as Tesla chairman while remaining CEO under the Securities and Exchange Commission settlement, without admitting any wrongdoing.
The impulsive billionaire appeared in court in a dark suit and tie on the third day of the San Francisco civil trial that his lawyer tried unsuccessfully to move to Texas, where Tesla is now headquartered, on the assumption that media coverage his tumultuous takeover of Twitter had infected the jury pool.
The jury that met earlier this week focused on Musk as he answered questions from Nicholas Porritt, an attorney representing Tesla shareholders. At one point, Musk asked Porritt if he wanted to speak closer to the microphone to better hear him. 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 share price falls. He called short selling a “malicious” practice that should be outlawed, denigrating those who profit from it as “a bunch of sharks”.
When he was shown messages from Tesla investors urging him to cut back or completely stop his Twitter habit before the 2018 takeover tweet, Musk said he couldn’t remember all of those interactions. years ago, especially since he got an email called “Niagara Falls.”
Even before Musk took the stand, U.S. District Judge Edward Chen said jurors could find both tweets false, allowing them to decide whether Musk deliberately misled investors and whether his statements caused them losses.
Musk has previously claimed he entered the SEC settlement under duress, claiming he believes he blocked financial support for a Tesla acquisition during meetings with Saudi Public Investment Fund representatives. 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 mocking the plan as an ill-conceived concept.
“This proposal was an extreme anomaly,” said Guhan Subramanian, a professor of business and law at Harvard University for more than 20 years. “It was incoherent. It was an illusion.”
In a lengthy cross-examination that delayed Musk’s appearance, a lawyer for Tesla’s board of directors attempted to undermine Subramanian’s testimony by pointing out that he relied on the help of graduate students to extract some of the documents related to the August tweets. 2018 to view. The attorney, William Price, also noted that Subramanian was paid $1,900 an hour for writing his report on the case.
The lawsuit over his Tesla tweets comes as Musk is taking aim at Twitter while serving as the automaker’s CEO and remaining heavily involved with SpaceX, the rocket company he founded.
Musk’s leadership on Twitter — where he cuts staff and alienates users and advertisers — has proved unpopular with current Tesla shareholders, who fear he’s spending less time running the automaker at a time when competition is heating up. Those concerns contributed to a 65% drop in Tesla stock last year, wiping out more than $700 billion in shareholder wealth — far more than the $14 billion fortune change that happened. product between the company’s high and low stock prices from August 7 to August 17. , 2018 Class Period.
Tesla shares have since split twice, making the $420 acquisition price mentioned 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 caused its stock to skyrocket and Musk to become 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 over his handling of Twitter.
When asked on Friday about the challenges Tesla faced in 2018, he recalled sleeping many nights at the automaker’s California factory to keep the company afloat.
“The pain level of making Tesla successful during this period of 2017, 2018 was excruciating,” he recalled.
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