SAN FRANCISCO, January 20 (Reuters) – Elon Musk of Tesla Inc. (TSLA.O) The chief executive testified Friday that investors don’t always react to his Twitter messages as he expects, and defended himself in a fraud trial over his 2018 tweet that he had funds to take the electric carmaker private.
Musk’s testimony began with questions about his use of Twitter, the social media platform he bought in October. He called it the most democratic way to communicate, but said his tweets didn’t always affect Tesla’s stock the way he expected.
“Just because I tweet something doesn’t mean people believe it or act on it,” Musk told a jury in San Francisco federal court.
Musk testified for less than 30 minutes before the court adjourned until Monday and was not asked about his 2018 tweet that he was considering taking Tesla private and had “funding secured.”
He is expected to address why he insisted he had the backing of Saudi investors to take Tesla private, which never happened, and whether he knowingly made a materially misleading statement with his tweet.
the case is a rare securities class action lawsuit trial and the plaintiffs have already cleared major legal hurdles, with US Judge Edward Chen ruling last year that Musk’s disclosure of funds was false and reckless.
Shareholders alleged that Musk lied when he sent the tweet, costing investors millions.
Musk, who wore a dark suit over a white shirt, spoke quietly and at times with bewilderment, in contrast to his occasional combative testimony in past trials.
Musk described the difficulties the company was going through at the time he sent the “funding secured” tweet, including bets from short sellers that the stock would fall.
[1/5] Tesla CEO Elon Musk testifies during a securities fraud trial in San Francisco, California, USA, on January 20, 2023 in this courtroom sketch. REUTERS/Vicki Behringer
“A bunch of sharks on Wall Street wanted Tesla dead, very desperately,” he said, describing short sellers, who profit when a share price falls.
He said short sellers plant false stories and said the practice should be illegal.
Tesla shares ended 5% higher at $133.42.
Earlier on Friday, Tesla investor Timothy Fries told a jury that he lost $5,000 buying Tesla stock after Musk sent out the tweet, leading to volatile swings in Tesla stock.
Fries said that “secured funds” meant to him that “there was a vetting, a critical review of those funding sources.”
Musk’s lawyer, Alex Spiro, told jurors in his opening statement Wednesday that Musk believed he had financing from Saudi backers and was taking steps to make the deal happen. Fearing media leaks, Musk tried to protect the “common shareholder” by sending the tweet, which contained “technical inaccuracies,” Spiro said.
Guhan Subramanian, a professor at Harvard Law School, told the jury that Musk’s behavior in 2018 was “unprecedented” and “inconsistent” in terms of structuring a corporate deal because he went public with his intention without proper financial or legal analysis. .
A jury of six men and three women will decide whether the tweet artificially inflated Tesla’s stock price by gambling with the state of the deal’s funding, and if so, by how much.
The defendants include current and former Tesla directors, whom Spiro said had “pure” motives in their response to Musk’s plan.
Reporting by Tom Hals in Wilmington, Del., and Jody Godoy in San Francisco; Edited by Noeleen Walder, Peter Henderson, Matthew Lewis, Daniel Wallis, and David Gregorio
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