Elon Musk gave a witness statement during a federal shareholder trial involving his 2018 claim that he had “financing secured” to take Tesla private. He said that his ownership in SpaceX, a private rocket firm, made his remark at the time justified and that the Saudi investors’ commitment to the deal was “unequivocal.” Investors filed the case, claiming that Musk’s 2018 promise caused them to lose billions of dollars.
Edward M. Chen, district judge, has previously found that the claim is false. Musk’s assertion was swiftly disproved as it became evident that while he had been in contact with the Saudi Arabia sovereign wealth fund over a prospective take-private transaction at a cost of about $70 billion, any deal and the funds required to complete it were not a sure thing.
Musk stated in court testimony that he thought the cash for taking Tesla private would have been guaranteed by his SpaceX shares alone. He added that it was a coincidence because 420 is frequently connected with marijuana and that he had chosen the $420 share price since it represented a 20% premium over the Tesla stock price. Additionally, he admitted that the purchase of Twitter at a price of $54.20 per share was influenced by the number 420.
After receiving an email from a company representative informing him that the Financial Times was preparing a story explaining that the Saudi Public Investment Fund had acquired a sizable stake in Tesla, Musk explained that the tweet was sent out as he was waiting to board his private plane from an airport in the Los Angeles region. He expressed worry that the newspaper knew more than it was disclosing and wished to alert investors to any potential.
The testimony also showed that Musk urgently texted Yasir al-Rumayyan, the chairman of the public investment fund, pleading for him to support him as the backlash to his statement mounted. He requested confirmation from the head of the Saudi investment fund that he had spoken with Musk about a deal to take Tesla private.
Overall, the trial is still going on, and it’s not yet obvious what will happen. The investors claim that Musk’s tweet caused them to lose billions of dollars, and the jury will determine whether Musk’s actions were fraudulent and whether the investors are entitled to any compensation.
Furthermore, during the trial, it became clear from the evidence that, despite Musk’s statements that the planned deal had “funding secured,” no firm financial agreements had been reached with any potential investors or partners at the time of the tweet. Additionally, it emerged that a number of Tesla’s board of directors members were taken off guard by the tweet and were not aware of the proposal to take the firm private.
Musk was also questioned in cross-examination over a tweet in which he expressed his excitement to “work with Silver Lake and Goldman Sachs as financial advisors,” despite the fact that no official agreements had been made with the companies. In his testimony, Musk said that this was a “mistake” and that he had no desire to cooperate with them.
In addition, there were concerns about Musk’s use of Twitter and whether he ought to be held accountable for posts that might influence a publicly listed company’s stock price. Musk said that his tweets should be viewed as an expression of his opinion rather than as factual claims.
The trial is still going on, therefore the verdict is still uncertain. If Musk’s conduct were dishonest and if the investors should receive any compensation will be decided by the jury.
