Musk Takes Stand to Defend Controversial Tweet: What You Should Know

Elon Musk is on trial for a Twitter-related controversy dating back to 2018, and on Friday he defended his actions in a San Francisco court.

The lawsuit centers on Musk’s August 2018 tweets in which he claimed he had secured financing to take Tesla private, spurring a stock frenzy that many of the automaker’s shareholders claim destroyed their shares.

Musk said in court that it was difficult to link Tesla’s stock price to his tweets, and also said that his tweeting was “the most democratic way” to share information.

“Just because I tweet about something doesn’t mean people will believe it or act on it,” he told a nine-person jury.

The class-action lawsuit was filed on behalf of shareholders who owned Tesla stock during the 2018 volatility, alleging that Musk used his platform to commit fraud

Here’s what you should know:

What happened in 2018?

On August 7, 2018, more than four years before Musk bought Twitter, he tweeted that he had “financing secured” for a $72 billion purchase of Tesla, and that he would take the company private for $420 per share. A few hours later he followed up with one second tweet which many believe made the deal sound imminent.

“Investor support is confirmed. Only reason this is not certain is that it is contingent on a shareholder vote,” Musk tweeted.

At the time of the tweets, Tesla’s stock had been performing poorly – one of the most shorted stocks on the market – and the company was experiencing widespread production problems. Musk’s Tweets caused an immediate spike and apparently caused a rally in the company’s stock prices for the next 10 days until Musk said there would be no acquisitions. When Tesla’s stock climbed so high, it put short sellers at significant risk of loss.

It became clear that a deal was not and may never have been on the horizon, and Musk ended up paying a $40 million settlement to securities regulators who also demanded that he step down as Tesla’s chairman. The Securities and Exchange Commission charged both Musk and Tesla with civil securities fraud, and each party had to pay $20 million in fines.

Not long after the acquisition fiasco in 2018, Tesla’s production picked up, and so did the shares. The company produced enough cars for the inventory to rise, and in 2021 Musk became the richest person in the world. His acquisition of Twitter last year knocked him out of that spot, but he remains one of the most influential billionaires in the world.

The trial unfolds

The trial began on January 17 with a nine-person jury.

Musk’s legal team has argued that Musk, as a savvy businessman, had been in preliminary talks with Saudi Arabia’s Public Investment Fund as a potential investor. They said Musk had spontaneously tweeted about the possibility in an effort to be transparent.

Former Tesla shareholders have already begun to testify that amid all the chaos that week in 2018, many of them sold their shares and saw significant drops in the shares they retained. US District Judge Edward Chen is presiding over the trial and ruled that the plaintiffs cannot address Musk’s $40 million settlement.

The case rests on the plaintiffs’ argument that Musk deliberately inflated Tesla’s stock and never really had plans to take the company private. Some of Tesla’s top executives and board members from 2018 are on the witness list, including Oracle CEO Larry Ellison and media mogul Rupert Murdoch’s son, James Murdoch.

Although court was adjourned for the weekend, Musk is due back in court on Monday. The trial is set to last three weeks, and continue until February 1.

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