Elon Musk was portrayed Wednesday as one of those liars who unwittingly destroyed the savings of “ordinary people” or well-intentioned visionaries as lawyers delivered opening statements in a trial focused on the Tesla purchase that never happened.
Lawyers from the opposing sides painted a very different portrait of Musk for the nine-person jury that will hear the three-week trial. The case centers on two August 2018 tweets posted by the billionaire on Twitter, which he now owns.
The tweets suggest that Musk has lined up financing to take Tesla private at a time when the automaker’s stock is falling amid production problems.
The prospect of a $72 billion purchase sparked a rally in the company’s stock price that abruptly ended a week later after it appeared it lacked the funds to pull off the deal. Tesla shareholders then sued him, saying Tesla’s stock wouldn’t be worth as much if he hadn’t bothered with the idea of buying the company for $420 a share.
Nicholas Porritt, the attorney representing Glen Littleton and other Tesla shareholders in the class-action case, quickly blasted Musk as he addressed the jury.
“Why are we here?” Porritt asked. “We are here because Elon Musk, the chairman and chief executive of Tesla, lied. His lies caused ordinary people like Glen Littleton to lose millions and millions of dollars. He also asserted that Musk’s tweets also damaged pension funds and other organizations that owned Tesla shares at the time .
Musk’s lawyer, Alex Spiro, argued that the rise in Tesla shares after the tweet mostly reflected investors’ confidence in Musk’s ability to pull off impressive feats, including building the world’s largest electric car while also running SpaceX, a rocket ship maker.
“Mr. Musk is trying to do something that has never been done before. Everybody knows that,” Spiro told jurors.
Spiro added that Musk has been in talks with representatives of Saudi Arabia’s Public Investment Fund to take Tesla private.
“He didn’t plan this tweet,” Spiro said of Musk August 7, 2018, statement at the heart of the trial. “It was a split-second decision” aimed at being as transparent as possible about discussions with Saudi funds about a potential deal.
After saying “guaranteed funds” for the purchase, Musk followed through with another tweet who suggested a deal was imminent.
Littleton, a 71-year-old investor from Kansas City, Missouri, was the first witness called to the stand. He said Musk’s claims about the funding came as a surprise because he had bought Tesla investments designed to reward him because he believed the automaker’s stock would be worth more than $420.
He said he sold most of his holdings to cut losses but still saw the value of his Tesla portfolio drop by 75%.
“The damage is done,” Littleton lamented. “I was very surprised.”
Littleton’s frustration escalated in October 2018, when he attacked Tesla for delaying delivery of vehicles to some of his nieces and nephews. That led to him becoming a major investor in the lawsuit.
“I still believe in Tesla to this day. I do,” Littleton said.
During cross-examination, attorneys for Tesla’s board of directors repeatedly questioned whether Littleton had legitimate reasons to believe a buyout was inevitable, but investors remained steadfast despite appearing confused.
“‘Guaranteed funding’ is the only thing that matters to me,” Littleton said. “That’s a clear statement.”
Musk’s 2018 tweets caught the attention of securities regulators, who concluded that he was false and that he was lying. In the settlement, they forced him to pay $40 million and required him to step down as chairman of Tesla.
U.S. District Judge Edward Chen, who presided over the hearing, ruled that shareholders’ attorneys could not cite the settlement in the case.
But Chen has ruled that Musk’s tweets were false, a finding that could be seen during the trial without mentioning the judge’s decision. Pollitt seized the opportunity during his opening statement, telling jurors that they should consider Musk’s tweets fake, as the judge allowed. Spiro shook his head as he listened.
The outcome of the trial could turn on the jury’s interpretation of Musk’s motives for the tweets. And Musk will have a chance to make his case to a jury.
After the trial adjourned Wednesday, Porritt told The Associated Press he hoped to call Musk to the stand when the trial resumes Friday after two more witnesses testify. If the allotted time runs out Friday, Musk will testify Monday, Porritt said.
Musk’s leadership on Twitter – where he has lashed out at staff and alienated users and advertisers – has proven unpopular among Tesla’s current shareholders, who worry that he has spent less time working for the automaker amid growing competition.
Those concerns led to a 65% percent decline in Tesla shares last year that wiped out more than $700 billion in shareholder wealth — more than the $14 billion swing that occurred between the company’s high and low stock prices from August 7 to August 17. , 2018, the period covered in the lawsuit.
Tesla shares have split twice since then, making the $420 price quoted in a 2018 tweet a $28 price point now. The stock price closed at $128.78, down from the company’s November 2021 split adjustment peak of $414.50.
After Musk floated the idea of buying Tesla, the company overcame production problems, resulting in a rapid increase in car sales that sent its stock soaring and made Musk the world’s richest man until he bought Twitter. Musk dropped from the top spot on the wealth list after the stock market reacted to his Twitter handle.
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