Elon Musk defends 2018 Tesla takeover tweet in class action trial testimony

Elon Musk, the chief executive of Tesla Inc, told a jury on Friday that investors did not always react to his Twitter messages as expected, during a 2018 trial of interest in taking the electric car maker private, which shareholders alleged cost them millions in trading losses. .

Musk’s testimony began with questions about his use of Twitter, the social media platform he bought in October. He called it the most democratic way to communicate but said his tweets didn’t affect Tesla stock as much as he hoped.

“Just because I tweet something doesn’t mean people believe it or will act on it,” Musk told a jury in San Francisco federal court.

Musk testified less than 30 minutes before the court was adjourned until Monday and he was not asked about a 2018 Twitter post in which he said he was considering taking Tesla private and that he had “safe funds.”

He is expected to address why he insisted that he had the backing of Saudi investors to take Tesla private, which never happened, and whether he deliberately made misleading statements in tweets.

The case is a rare securities class action trial and the plaintiffs have cleared a high legal hurdle, with US Judge Edward Chen ruling last year that Musk’s posts were dishonest and reckless.

Shareholders say Musk lied when he sent the tweet, costing investors.

The company is facing difficulties

Musk, dressed in a dark suit over a white, button-down shirt, spoke slowly and at times in confusion, in contrast to his sometimes combative testimony during past trials.

Musk described Tesla’s difficulties during a time when he sent a “safe fund” tweet, including a bet by short-sellers that the stock would fall.

“A bunch of sharks on Wall Street wanted Tesla off, very badly,” he said, describing short-sellers, who profited when the stock fell in price.

He said short sellers were planting false stories and said the practice should be illegal.

Tesla shares ended Friday at $133.42 US, about five percent higher than the previous day.

Earlier on Friday, Tesla investor Timothy Fries told a jury he lost $5,000 buying Tesla stock after Musk sent a tweet amid a lawsuit.

Fries said that “guaranteed funding” means “there has been some vetting, some critical review of the source of that funding.”

Musk wants to protect shareholders, lawyers say

Musk’s lawyer, Alex Spiro, told jurors in his opening statement on Wednesday that Musk believed he had funding from Saudi backers and took steps to make the deal work.

Fearing a leak to the media, Musk tried to protect “everyday shareholders” by posting the tweet, which contained “technical inaccuracies,” Spiro said.

Guhan Subramanian, a Harvard Law School professor, told the jury that Musk’s behavior in 2018 was “unprecedented” and “incoherent” in structuring the company’s deal because he went public with the intention of taking Tesla private without proper financial or legal analysis.

A jury of nine will decide whether the tweet artificially inflated Tesla’s stock price by playing up the financing status of the deal, and if so, by how much.

The defendants include current and former Tesla directors, who Spiro said had “pure” motives for reacting to Musk’s plan.