Elon Musk has denied that his frequent Twitter posts have moved Tesla’s stock price, as he begins to testify Friday in a trial that his 2018 “hedge fund” tweets illegally manipulated the electric car maker’s value.
Dressed in a dark suit and tie, Musk was called to the witness stand late Friday, the third day of a closely watched trial in federal court in San Francisco examining the impact of Musk’s 2018 tweet that he said he had the funds needed to take Tesla private. . No deal could be reached, prompting shareholders to sue Musk, Tesla and the company’s board of directors at the time.
The lawyer for the shareholders, Nicholas Porritt, pressed Musk that he agreed that the posts on the social network – which he currently owns – had an impact on the market.
“It’s hard to say that stock prices are related to tweets,” Musk said, suggesting that just because he’s posting information or thoughts doesn’t mean he’s a “believer.”
In the moments and days after Musk’s “safe fund” tweet on August 7, 2018, Tesla’s share price was extremely volatile, and fell sharply when it became clear that the plan to get Saudi backers to finance the private venture would not go ahead.
The trial in the class action lawsuit, which is expected to last another two weeks, said the cost to investors could reach billions of dollars.
Musk described his Twitter account as the most “democratic” way to reach retail investors, describing the group as the company’s most “loyal” supporters.
“But obviously there are limits to what you can say,” he said. “You can obviously be more verbose in your files. Everyone on Twitter knows this.
Stating “correlation is not causation”, Musk cited an example in May 2020 when he posted on Twitter that Tesla’s stock price was “too high”. He said, contrary to logic, the automaker’s stock price “rose” after the tweet, despite the warning.
Trading data showed Tesla’s share price closed down 10 percent on the day of the tweet, though it made a recovery the following day.
Musk acknowledged that his tweets are subject to the same securities laws as other statements from Tesla, such as financial filings or press releases. The U.S. Securities and Exchange Commission in 2018 fined Musk and Tesla $20 million for each of their “safe funds” tweets, and forced them to resign as chairman of the board.
Porritt noted that some people in Musk’s circle – including Ron Baron, a big investor in Tesla – have suggested that he withdraw from using the platform that he would have had a few years ago.
Continuing his long-standing and oft-stated resentment of short selling, Musk went straight to the jury to explain that the “short sellers” were not “short sellers” but “a bunch of sharks on Wall Street” who wanted to see Tesla fail.
Musk will return to the witness stand on Monday morning for further questioning.
Earlier on Friday, the court heard from Harvard Law School professor Guhan Subramanian who testified that Musk’s tweets avoided the typical disclosures he would make about big business deals.
Subramanian said the approach was “incoherent” and an “extreme outlier”, according to Reuters.