Elon Musk takes the stand to defend Tesla takeover tweets

“Retail investors are very important to me,” he said during questioning by shareholder attorney Nicholas Porritt.

The case is a rare class action lawsuit in the securities space, and plaintiffs have already cleared steep legal hurdles, with US Judge Edward Chen ruling last year that Musk’s funding post was untrue and reckless.

Shareholders claimed Musk lied when he sent the tweet.

Musk described the difficulties the company was experiencing around the time he tweeted “funding secured,” including bets from short sellers that the stock would fall.

“A bunch of sharks on Wall Street really wanted Tesla dead,” he said, describing short sellers who profit when a stock falls in price. He said they planted false stories and said the practice should be made illegal.

Previously, Tesla investor Timothy Fries told the jury that he lost $5,000 buying Tesla stock after Musk sent the tweet that sparked volatile swings in the stock.

Fries said that for him “funding secured” means that “there have been some reviews, some critical reviews of these sources of funding”.

Musk’s attorney Alex Spiro told jurors in his opening statement Wednesday that Musk believes he is being funded by Saudi backers and is taking steps to see the deal through. Fearing leaks to the media, Musk tried to protect the “ordinary shareholder” by sending out the tweet that contained “technical inaccuracies,” Spiro said.

Guhan Subramanian, a Harvard Law School professor, told the jury that Musk’s conduct in 2018 was “unprecedented” and “incoherent” in relation to the structuring of an enterprise agreement because he communicated with his intent without proper financial or legal analysis had gone public.

A jury of six men and three women will decide whether the tweet artificially inflated Tesla’s stock price by hyping the funding status for the deal, and if so, by how much. Musk testified less than 30 minutes before the court adjourned until Monday.

Musk has previously claimed he entered the SEC settlement under duress and claimed he secured financial backing for a Tesla buyout in meetings with officials from the Saudi Arabia Public Investment Fund.

The trial over his Tesla tweets comes at a time when he has been focused on Twitter, which he acquired in October after unsuccessfully trying to retire.

Musk’s stewardship of Twitter — where he has eroded staff numbers and alienated users and advertisers — has proved unpopular with Tesla’s current shareholders, who fear he has spent less time directing the automaker at a time of increased competition. Those concerns contributed to a 65 percent decline in Tesla stock over the past year that wiped out more than $700 billion in shareholder wealth — far more than the $14 billion wealth reversal that took place between the high and low stock prices of the company Company on August 7-17, 2018, the period covered by the class action lawsuit.

Tesla stock has split twice since then, so the $420 buyout price quoted in its 2018 tweet is now worth $28 on an adjusted basis. Shares of the company traded around $133 on Friday, down from the split-adjusted high of $414.50 in November 2021.

After Musk dropped the idea of ​​a Tesla buyout, the company overcame its manufacturing woes, resulting in a rapid upswing in auto sales that sent its stock skyrocketing and made Musk the richest person on earth until he bought Twitter. He fell from the top of the asset list after the stock market backlash over his dealings with the social media platform.

Reuters, A.P