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.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
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 shareholders attorney’s pointed out that Musk repeated those “wrong words” over and over again in follow up tweets and an official Tesla blog post.
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 $US700 ($972) billion in shareholder wealth. Musk’s recent chaotic and unpredictable management of Twitter, and its $US44 ($61) 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.”