Elon Musk Wednesday was portrayed either as a liar who jeopardized the savings of “regular people” or as a well-intentioned visionary as lawyers made opening statements focusing on a trial. Tesla Purchase that never happened.
Lawyers for the opposing sides painted different portraits of Musk for the nine-person jury that will hear the three-week trial. The case centers on an August 2, 2018 tweet posted by the billionaire to Twitter, which he now owns.
The tweets indicated that Musk had raised financing to take Tesla private at a time when the automaker’s stock was falling amid production problems.
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The prospect of a $72 billion buyout sparked a rally in the company’s share price that ended abruptly a week later when it became clear that it did not have the funds to complete the deal. Tesla’s shareholders then sued him, saying that the value of Tesla’s shares would not have skyrocketed if he had not considered buying the company for $420 per share.
Nicholas Porritt, an attorney representing Glenn Littleton and other Tesla shareholders in the class-action case, immediately denounced Musk while addressing the jurors.
“why are we here?” Porrit asked. “We are here because Tesla Chairman and CEO Elon Musk lied. His lies cost regular people like Glenn Littleton hundreds of millions of dollars in losses.” He also said that Musk’s tweets also harmed pension funds and other organizations that held Tesla stock at the time.
Musk’s lawyer, Alex Spiro, said the run-up in Tesla’s stock after the tweet reflected investors’ confidence in Musk’s ability to pull off amazing feats, including running SpaceX, the maker of rocket ships, as well as the world’s largest rocket ship. Including the creation of the largest electric automaker.
“Mr. Musk tries to do things that have never been done before. Everybody knows that,” Spiro told the jury.
Spiro said Musk was in advanced talks with representatives of Saudi Arabia’s Public Investment Fund to take Tesla private.
“He didn’t plan to tweet it,” Spiro said of Musk’s August 7, 2018 statement at the heart of the trial. “It was a split second decision” with the aim of being as transparent as possible about discussions with the Saudi fund about a potential deal.
After saying “funding secured” for the buyout, Musk followed up with another tweet suggesting a deal was imminent.
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Littleton, a 71-year-old investor from Kansas City, Missouri, was the first witness called to the stand. He said Musk’s claim about the financing worried him because he bought a Tesla investment designed to reward him for his belief that the automaker’s stock would eventually be worth more than $420.
He said he sold most of his holdings to recoup his losses, but still saw his Tesla portfolio lose 75% in value.
“The damage was done,” lamented Littleton. “I was in a state of shock.”
Littleton’s frustration escalated in October 2018, when he lambasted Tesla for late deliveries on vehicles meant for some of his nieces and nephews. This made him a major investor in the lawsuit.
“I still believe in Tesla today. I do,” Littleton said.
During cross-examination, an attorney for Tesla’s board of directors repeatedly questioned whether Littleton had legitimate reason to believe the purchase was inevitable, but the investor remained steadfast, at times confused.
Littleton testified, “‘safe money’ was the only thing that mattered to me.” “It was such a defining statement.”
Musk’s 2018 tweets attracted the attention of securities regulators, who concluded they were inappropriate and that he was lying. In a settlement, they forced him to pay $40 million and required him to step down as Tesla’s chairman.
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US District Judge Edward Chen, who is presiding over the trial, ruled that attorneys for the shareholders could not refer to that agreement in the case.
But Chen has already ruled that Musk’s tweet was false, a finding that may be indicated during the trial without specifically mentioning the judge’s determination. Polit seized that opportunity during his opening statement, informing jurors to assume Musk’s tweet was false, as the judge allowed. Spiro shook his head upon hearing that.
The outcome of the trial could turn on the jury’s interpretation of Musk’s motive for the tweets. And Musk will have a chance to present his case in front of a jury.
After the trial was adjourned on Wednesday, Porritt told The Associated Press that Musk is expected to take a call to the stand when proceedings resume on Friday following testimony from two more witnesses. If the allotted time runs out on Friday, Musk would testify on Monday, Porritt said.
Musk’s leadership of Twitter — where he has fired employees and alienated users and advertisers — has proved unpopular among Tesla’s existing stockholders, who are concerned he is giving the automaker less time at a time of intense competition.
Those concerns contributed to a 65% percent decline in Tesla’s stock last year, which wiped out more than $700 billion in shareholder wealth — $14 billion between the company’s high and low stock prices from August 7 to August 17. Much more than a dollar swing. , 2018, the period covered in the lawsuit.
Tesla’s stock has split twice since then, now quoting a $28 value on an adjusted basis from its 2018 tweet of $420. Shares closed Wednesday at $128.78, down from the company’s November 2021 split-adjusted peak of $414.50.
After Musk gave up on the idea of buying Tesla, the company overcame a production problem, resulting in a boom in car sales that sent its stock soaring, and Musk became the world’s richest man until That he didn’t buy Twitter. Musk fell from the top spot on the wealth list following the stock market reaction.