CAPE CANAVERAL: Elon Musk went back to federal court on Tuesday to defend himself against a class-action lawsuit that claims he misled Tesla shareholders with a tweet about an unsuccessful buyout. The billionaire defiantly insisted that if he wanted to, he could have pulled it off, and he did.
During his third day of testimony, Musk spent roughly three more hours on the witness stand before being excused by US District Judge Edward Chen. During a civil trial that is anticipated to be handed over to a nine-person jury at the beginning of February, it is highly unlikely that Musk, 51, will be summoned back to the witness stand.
While being questioned by his own attorney, Alex Spiro, Musk spent much of Tuesday portraying himself as an impeccably trustworthy business leader who can raise as much money as he needs to pursue his visions. Musk also owns Twitter and continues to run Tesla. Nicholas Porritt, a shareholder attorney, who had voiced his displeasure earlier in the trial, engaged in mockery sparring with him.
With a comment in which he expressed doubt that the lawyer was looking out for the best interests of Tesla shareholders, Musk left no doubt about his contempt for Porritt with two separate occurrences on Tuesday under Spiro's gentle prodding. The remarks were struck from the record after the judge quickly rebuked them. It's inappropriate," Chen warned Musk at one point.
Musk purposefully turned his attention away from Porritt when he was being challenged, giving his explanations while looking directly at the jurors sitting a few feet to his right. Another time, Musk said without going into detail that Porritt's question about whether he had ever caused losses for investors contained "falsehoods."
On the other hand, when Spiro asked the billionaire how much money he had made for investors over the course of his career, he erroneously addressed Musk as "your honor." In the San Francisco courtroom full of media and other spectators listening to Musk, who has become even more famous since completing his $44 billion purchase of Twitter in October, the error caused a brief moment of amusement.
The question at hand in the current trial is whether two tweets Musk sent on August 7, 2018, caused harm to Tesla shareholders during the ten days before he admitted that the buyout he had planned wasn't going to happen. Because of the statements, Musk and Tesla settled for $40 million without admitting any wrongdoing.
Musk stated in the first of his 2018 tweets that "funding secured" for a $72 billion, or $420 per share, buyout of Tesla at a time when the electric carmaker was still struggling with production issues and was significantly undervalued. A few hours later, Musk sent a second tweet implying that a deal was imminent.
Musk said in those tweets that Tesla would not go public for a few weeks. After that, a month later, Musk and Tesla settled a $40 million dispute with securities regulators over claims that the tweets were false.
Musk has previously maintained that he never wavered in his belief that he had the funds for a deal and that he entered into the settlement under duress.
The majority of Tuesday was spent by Musk attempting to persuade the jurors that the two tweets, in which he indicated that he had lined up the funds to take Tesla private because the electric automaker was having issues with production and was worth far less than it was at the time, were not deceptive. The judge has already said that the jurors can believe those two tweets are false, so they have to decide if Musk intentionally misled investors and if his statements caused them to lose money.
Musk told jurors, guided by Spiro, that he had only stated that he was "considering" a Tesla buyout but had never promised a deal would be made. However, Musk stated that he considered it essential to inform investors that Tesla may be about to end its eight-year tenure as a publicly traded company.
Musk stated, "I had no ill motive." My intention was to act in the best interest of all shareholders.
Musk was occasionally combative, indignant, and exasperated during Porritt's grilled discussion the day before. Throughout everything, Musk has insisted that he secured funding for what would have been a $72 billion buyout of Tesla during meetings with Saudi Arabia's Public Investment Fund representatives in 2018. However, no specific funding amount or price was discussed.
Musk claimed that texts and emails claiming that a Saudi fund representative had never pledged the funds for a full Tesla buyout were nothing more than the words of someone attempting to backtrack on a previous promise made in private conversations.
Musk once more scoffed at the notion that his belief that he had the Saudi funding's financial backing was not sufficient for him to tweet about a potential Tesla buyout shortly after Porritt resumed his questioning on Tuesday.
Musk testified, "We are talking about the kingdom of Saudi Arabia." They can purchase Tesla multiple times. For them, this was not a lot of money."
In addition, Musk reiterated his earlier testimony that he could share some of his holdings in SpaceX, a privately held rocket ship manufacturer that he also founded, to finance a Tesla buyout. That would be comparable to what he did when he bought Twitter, which required him to sell approximately $23 billion worth of Tesla stock.
That's something Musk said on Tuesday that he didn't want to say, but it showed that he could come up with the money to buy expensive deals. Tesla shareholders worry that Musk will be distracted as the automaker faces more competition because of his ownership of Twitter. Since Musk took over Twitter, Tesla's stock has lost about one third of its value.
After accounting for the two splits that have taken place since Musk's tweets in 2018, the stock is still worth approximately seven times what it was at the time. That made it possible for Musk to tell jurors on Tuesday that any investor who held shares of Tesla in August 2018 would have done "extremely well" if they had simply held on to the stock.
Musk stated, "It would have been the best investment in the stock market."