Elon Musk takes the witness stand to defend his Tesla buyout tweets: NPR

In this courtroom sketch, Elon Musk, left, appears with shareholder attorney Nicholas Porritt Friday in federal court in San Francisco.

Vicki Behringer/AP


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Vicki Behringer/AP

In this courtroom sketch, Elon Musk, left, appears with shareholder attorney Nicholas Porritt Friday in federal court in San Francisco.

Vicki Behringer/AP

SAN FRANCISCO — Elon Musk took the witness stand Friday to defend a 2018 tweet in which he claimed he arranged the financing 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 that he misled investors, leading him to be dragged into court for about half an hour on Friday to give sworn testimony before a nine-member jury and a packed room of media and other spectators.

The trial was then adjourned for the weekend and Musk was told to return Monday to answer more 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 that the limitations of Twitter’s 280-character limit can make it difficult to make everything as clear as possible.

“I think you can be absolutely truthful (on Twitter),” Musk claimed on the stand. ‘But can you be complete? Of course not.’

Musk’s latest headache stems from the inherent brevity of Twitter, a service he’s run since buying it for $44 billion in October.

The trial hinges on whether a pair of tweets Musk posted on Aug. 7, 2018, damaged Tesla shareholders during a 10-day period prior to Musk’s admission that the buyout he envisioned would not happen. .

In the first of those two tweets from 2018, Musk declared “funding assured” for what would have been a $72 billion buyout of Tesla at a time when the electric car maker was still struggling with production 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 stepped down as chairman of Tesla, while remaining CEO as part of the Securities and Exchange Commission settlement, without admitting any wrongdoing.

The impulsive billionaire came to court in a dark suit and tie on the third day of the San Francisco civil trial that his lawyer tried unsuccessfully to relocate 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 assembled earlier this week focused intently 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 so he could 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 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 curtail or completely stop his Twitter habit before the 2018 buyout tweet, Musk said he couldn’t remember all those interactions from years ago, mainly because he got a “Niagara Falls” worth of emails.

Even before Musk took the stand, U.S. District Judge Edward Chen had stated that the jurors may find those two tweets false, leaving them to decide whether Musk deliberately misled investors and whether his statements left them with losses.

Musk has previously claimed he entered the SEC settlement under duress, claiming he believed he locked in financial support for a Tesla buyout during meetings with representatives of the Saudi Arabian public investment fund.

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 booth Friday mocking the plan as a bad idea. thoughtful concept.

“This proposal was an extreme outlier,” 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 it depended on the help of graduate students to extract some of the material related to view the tweets from August 2018. The lawyer, William Price, also noted that Subramanian was paid $1,900 an hour to prepare his report on the case.

The lawsuit over his Tesla tweets comes at a time when Musk has taken to Twitter while also serving as the automaker’s CEO and also remaining heavily involved with SpaceX, the rocket ship company he founded.

Musk’s leadership on Twitter — where he has gutted the workforce and alienated users and advertisers — has proved unpopular with Tesla’s current shareholders, who fear he has spent less time steering the automaker in a time of increasing competition . Those concerns contributed to a 65% drop in Tesla’s stock last year, wiping out more than $700 billion in shareholder wealth — far more than the $14 billion swing in fortune that occurred between the company’s high and low stock prices. during August 7-17. , 2018 period covered by the class action lawsuit.

Tesla’s stock has since split twice, making the $420 buyout price mentioned in its 2018 tweet now worth $28 on an adjusted basis. Shares of the company were trading around $133.42 on Friday, down from the November 2021 split-adjusted high of $414.50.

After Musk dropped the idea of ​​a Tesla buyout, the company overcame its manufacturing woes, resulting in a rapid surge in car sales that soared his inventory and made Musk the richest person in the world, until he bought Twitter. Musk dropped from the top spot on the wealth list following the stock market’s backlash to his handling of Twitter.

When asked on Friday about the challenges Tesla faced in 2018, he recalled sleeping many nights in the automaker’s California plant while trying to keep the company afloat.

“The immense pain of making Tesla successful in that period of 2017, 2018 was excruciating,” he recalled.

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