Elon Musk denies his social media posts were never responsible for swings in Tesla’s share price.
Elon Musk testified on Friday the 20th Jan 2023, that he was aware that he posted important information on his Twitter account about Tesla, the electric car company he runs. But he denied that his social media posts were responsible for swings in Tesla’s share price.
“Just because I tweet something, doesn’t mean people believe it or act accordingly,” Mr. Musk said in federal court in San Francisco, adding, “The causal relationship is clearly not there simply because of a tweet.”
“One cannot ignore the character limitation, and everyone on Twitter is aware of the character limitation,” he added, referring to the post character limit of tweets in the platform.
Mr. Musk made those remarks in response to questions from a lawyer representing investors who said they’ve lost big money on Tesla’s stock after Mr. Musk discussed a proposal to take the company private in 2018. The investors are seeking billions in damages from both Mr. Musk and Tesla.
Mr. Musk, wearing a dark suit and a black surgical mask, arrived in a courtroom filled with lawyers, reporters and people who are interested in the case and in Mr. Musk.
A group that appeared to be part of Mr. Musk’s security detail spoke in whispers to court officers and stood at the room’s doors before Mr. Musk walked in.
Lead shareholder plaintiff Glen Littleton is seeking billions of dollars in damages over the 2018 tweet. Shares of Tesla stock began a steady decline that continued into the following year.
In 2018, Mr. Musk wrote on Twitter: “Am considering taking Tesla private at $420. Funding secured.” Also he then wrote: “Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.”
Tesla’s stock price jumped after he published those posts but fell as the deal did not advance.
In the opening statements this mid-week, the investors’ lawyers argued that Mr. Musk had known that Tesla was nowhere near going private and lied in how he described the proposal. Investors made decisions because they believed Mr. Musk’s posts were true, they said.
“For the stock market to work properly and fairly, you need accurate and reliable information,” said Nicholas Porritt, a lawyer for the investors. Otherwise, he added, “people won’t be able to invest and save for their future, for their retirement.”
But lawyers for Mr. Musk and Tesla have argued that the chief executive did not lie when he said he was thinking about taking Tesla private and that people invested in the company because of that consideration. The plan to take Tesla private collapsed not because Mr. Musk hadn’t secured the funding, but because he didn’t have approval by shareholders.
Mr. Spiro also said Mr. Musk made a “split-second decision” to post on Twitter about taking Tesla private because he was reacting to reports that Saudi Arabia’s Public Investment Fund had bought Tesla shares. Mr. Musk meant to convey that “funding wasn’t an obstacle,” Mr. Spiro added, not that funding had been secured. Mr. Musk and Tesla’s legal team tried to compel Saudi officials to testify but gave up that effort last week.
On the witness stand, Glen Littleton, one of the investors and a plaintiff in the case, had stated that Mr. Musk’s first statement on Twitter about taking the company private seemed definitive. As a result that, Mr. Littleton said he began trading options.
Timothy Fries, another investor and plaintiff in the case, testified on Friday that Mr. Musk’s first statement on Twitter appeared to present a good opportunity to invest in Tesla” maintained Mr. Timothy who bought shares in the company the next day after Mr. Musk tweeted.
“I wasn’t ready to purchase shares until I saw the tweet,” Mr. Fries said. He thought that the deal was still being negotiated but that Mr. Musk’s post meant “there was a committed party and those funds had been vetted.”
“The core of what he’s saying is indisputably true,” said Alex Spiro, (a lead lawyer on Mr. Musk and Tesla’s legal team), referring to the phrase “am considering.” “It wasn’t reckless to assume he could get funding. It was reckless to use the wrong choice of words.”
Mr. Musk testified for about 30 minutes on Friday afternoon and he’s expected to return to the court to answer more questions on Monday 23 Jan 2023. He nodded to jurors as he left the courtroom.
In 2018, Mr. Musk and Tesla settled a separate lawsuit with the S.E.C. about his plan to take Tesla private. They paid fines to the S.E.C., and Mr. Musk agreed to resign as chairman of the automaker and to allow a lawyer to review certain statements about the company before Mr. Musk can post the information on social media.
Mr. Musk also acknowledged that in July 2018 his associates and friends, including a Tesla director at the time, Antonio Gracias, suggested that he take a break from Twitter. That summer
When asked whether he heeded their advice, Mr. Musk answered: “I suppose I continued to tweet.”
His posts were closely followed and analyzed by investors and others interested in the company and electric cars.
Whichever way, the trial started less than three months after Mr. Musk acquired Twitter and fired most of that company’s employees. He has also alienated many people by changing the social media platform’s content rules, reinstating some users whose accounts had been suspended in the past, including former President Donald J. Trump.
Mr. Musk’s team tried to have the case moved to Austin, Texas, where Tesla is based, arguing that he couldn’t get a fair trial in San Francisco because of local news coverage of his Twitter takeover. Judge Chen denied that request.
Instead, the case will be decided by a jury of two women and seven men — one of whom said his thoughts about Mr. Musk and Tesla were “nothing” in his juror questionnaire, and one of whom called Mr. Musk a “fast-rising businessman.” The trial is expected to last around three weeks.
The senior district judge overseeing the case, Edward M. Chen, has already ruled that Mr. Musk’s tweet about “funding secured” and his second statement on Twitter were untrue. But the jury still has to decide whether those statements actually led investors to lose money.