Billionaire Elon Musk is on trial for fraud claims for his 2018 tweet that he had ‘funding secured’ to privatise Tesla at $420 per share.
Published On 24 Jan 2023
Elon Musk testified that he had “no ill motive” when he tweeted in 2018 that he had funding lined up to buy out his electric car company Tesla Inc, a claim that some shareholders have branded a lie.
Musk is defending against claims he defrauded investors by tweeting on August 7, 2018 that he had “funding secured” to take Tesla private at $420 per share, and that “investor support is confirmed”.
The trial tests whether the world’s second-richest person can be held liable for his sometimes rash use of Twitter.
He testified on Tuesday in response to questions from his lawyer Alex Spiro that his tweet was intended to inform, not deceive, investors about his interest in taking Tesla private, rather than have the news leaked to a select few.
Musk said he had already discussed his interest with the Tesla board and Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, and he feared it would leak to the media.
“I had no ill motive,” he said. “My intent here was to do the right thing for shareholders.”
He told the jury he decided to drop the idea of taking the company private after getting feedback from shareholders.
“After talking to a number of investors, especially the smaller investors, they said they would prefer a Tesla that remained public and I felt it was important to be responsive to their wishes,” Musk testified.
Funding ‘absolutely not an issue’
Musk returned to the stand on Tuesday after about five hours of testimony on Monday and an appearance on Friday.
Tesla’s stock surged after Musk’s 2018 tweet about the $420 per share price, which was a premium of about 23 percent to the prior day’s close, only to fall as it became clear the buyout would not happen. Investors say they lost millions of dollars as a result.
A jury of nine will decide whether the Tesla CEO artificially inflated the company’s share price by touting the buyout’s prospects, and if so by how much.
The jury was shown notes and documents from a board meeting in the days after the tweet at which Goldman Sachs, which was working with Musk on the proposed deal, had indicated there was more than enough funding to take the company private.
“Funding was absolutely not an issue,” Musk testified. “It was quite the opposite.”
Goldman Sachs did not immediately reply to a request for comment.
However, during questioning by investors’ attorney Nicholas Porritt, Musk said he did not discuss specific amounts of funding with any of the potential investors such as the Saudi fund, Larry Ellison or Silver Lake.
Musk repeatedly resisted the “yes” or “no” response sought by Porritt about discussions over funding, prompting US District Judge Edward Chen at one point to help with the questioning.
On Monday, Musk said he could have financed the deal by selling his stake in SpaceX, the aerospace company where he is also chief executive officer. He has also said he believed financing had been pledged by Saudi representatives of the Public Investment Fund before they backpedaled.