A nine-person jury sat Tuesday to hear a trial that will determine whether Tesla CEO Elon Musk lied to investors by asserting in 2018 tweets that he had secured financing to take on a private electric car.
The five-hour process sets the stage for opening statements to start Wednesday in the case, which is expected to include the testimony of Musk to explain his thoughts while participating in one of his favorite activities – tweeting on the Twitter service that he now has.
In the case of Tesla, Musk’s tweets led to a rally in the company’s stock price that abruptly ended a week later after it became apparent that he did not have the funds to buy it. Investors then sued him, saying Tesla’s stock wouldn’t have swung as high in value if he hadn’t interfered with the prospect of buying the company at $420 a share.
Musk’s tweet also caught the attention of securities regulators, who concluded that it was untrue 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.
He has since insisted that he entered the settlement under duress and believes he has locked in financial support for the purchase during a meeting with representatives of the Saudi Arabian Public Investment Fund.
Although he has made big changes at Twitter, Musk remains the CEO of Tesla and has gained much of his wealth and fame from the company.
The trial depends on it August 7, 2018, tweet where Musk claimed he had raised the financing to pay for the $72 billion purchase of Tesla, which he later expanded. with a follow-up speech that makes the deal seem close.
But the purchase never happened, and now Musk must explain his actions under oath in federal court in San Francisco. The class action lawsuit was filed on behalf of investors who owned Tesla stock for a 10-day period in August 2018.
The outcome of the trial could turn on the jury’s interpretation of Musk’s motives for the tweets, which US District Judge Edward Chen has ruled to be false.
The judge dealt Musk another setback on Friday, when he rejected Musk’s bid to transfer the trial to federal court in Texas, where Tesla will move its headquarters in 2021. Musk has argued that negative coverage of the Twitter purchase has poisoned the jury pool in the San Francisco Bay Area. .
The challenge of finding jurors without strong feelings about Musk became real during Tuesday’s tough selection process.
At one point, the judge flagged some prospective jurors who had expressed misgivings or too much enthusiasm about Musk in previous questionnaires. Seven jurors were questioned individually, away from the rest of the jury pool, to minimize the possibility of the influence of the opinions of others in the courtroom.
Chen and lawyers for the shareholders and Musk eventually fired the seven jurors, who variously described Musk as “arrogant,” “narcissistic,” “unpredictable,” “a bit of a rocker,” “mercenary” and “genius. . . “
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 devoted less time to the automaker amid growing competition.
Those concerns led to a 65% decline in Tesla shares last year that wiped out more than $700 billion in shareholder wealth — more than the $14 billion in fortunes that occurred between the company’s high and low stock prices from Aug. 7 to Aug. 17, 2018, the covered period in the lawsuit.
Tesla shares have split twice since then, making the $420 price worth $28 on an adjusted basis today. The stock price closed at $122.40, 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.
The trial may provide insight into Musk’s management style, as the witness list includes some of Tesla’s current and former top executives and board members, including figures such as Oracle founder Larry Ellison and James Murdoch, the son of media mogul Rupert. Murdoch.
The drama may explain Musk’s relationship with his brother, Kimbal, who is also on the list of potential witnesses. The trial will run until early February.
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