Elon Musk faces backlash from shareholders who say they lost a lot of money after he falsely tweeted about taking Tesla private

Elon Musk took the witness stand on Friday to defend a 2018 tweet that claimed he had lined up financing to withdraw Tesla private in a deal that’s not even 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, which dragged him to court on Friday.

The wealthy billionaire took the witness stand wearing a black suit on the third day of a civil trial in San Francisco that his attorney unsuccessfully tried to move to Texaswhere Tesla is now headquartered, on the premise of media coverage of his chaotic takeover Twitter the jury pool is tainted.

A nine-person jury convened earlier this week will be responsible for deciding whether a pair of tweets posted by Musk on August 7, 2018 harmed Tesla shareholders in a 10-day period. period until a Musk admission that the purchase he was considering was not. will not happen.

A month later, Musk resigned as chairman of Tesla while remaining CEO as part of a Securities and Exchange Commission settlement without acknowledging any wrongdoing.

In the first of two 2018 tweets, Musk stated “fund secured” for what would have been a $72 billion purchase of Tesla at a time when the electric automaker was still facing production problems and was worth less than it is today. Musk followed up a few hours later with another tweet suggesting a deal is imminent.

On Friday’s stand, Musk – who last year bought Twitter for $44 billion – said tweeting was the “most democratic way” to communicate with investors.

“I care a lot about retail investors,” he said during questioning by shareholder attorney Nicholas Porritt.

But he acknowledged that investors would get more detail in a traditional corporate filing with securities regulators, given the character limits set by Twitter.

“I think you can be honest” on Twitter, Musk said. “But can you be comprehensive? Of course not.”

Even before Musk took the stand, U.S. District Judge Edward Chen ruled that jurors could consider both tweets false, allowing them to decide whether Musk intentionally misled the public. invested and if his statements caused them losses.

Musk has previously argued that he entered into the SEC settlement under duress and maintains that he believes he locked up financial support for a Tesla buyout during meetings with representatives from Saudi Arabia’s Public Investment Fund.

The test of his Tesla tweets comes at a time when he is focusing on Twitter, which he acquired in October after trying to back out of the purchase.

Musk’s leadership at Twitter – where he belongs the staff were beaten and isolated users and advertisers – proved unpopular with Tesla’s current stockholders, who worried that he was spending less time driving the car at a time when competition was intensifying. Those concerns contributed to a 65% decline in Tesla stock last year that wiped out more than $700 billion in shareholder wealth — more than the $14 billion change in fortunes that occurred between the high and low. the company’s stock price on August 7-17. , 2018 period covered by the class-action lawsuit.

Tesla’s stock has split twice since then, making the $420 buyout price cited in his 2018 tweet worth $28 on an adjusted basis today. The company’s shares traded at around $133 Friday, off the company’s November 2021 split-adjusted peak of $414.50.

After Musk dropped the idea of ​​a Tesla acquisition, the company overcame its production problems, resulting in rapid growth in car sales that caused its stock to soar and positioned Musk as the most richest man in the world until he bought Twitter. Musk has fallen from the top spot on the wealth list following a stock market backlash over his handling of Twitter.

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