SAN FRANCISCO (TSTIME) — Elon Musk returned to federal court to defend against a class action lawsuit alleging he misled Tesla shareholders with a tweet about an aborted buyout that the billionaire defiantly maintained Tuesday he could have succeeded if he had wanted to.
Musk spent about three more hours on the stand during his third day of testimony before being excused by U.S. District Judge Edward Chen. It is unlikely that the 51-year-old Musk will be called to the witness stand at a civil trial that is expected to be turned over to a nine-member jury in early February.
Musk, who also owns Twitter while continuing to run Tesla, spent much of Tuesday portraying himself as he was questioned by his own lawyer, Alex Spiro, as an impeccably trustworthy business leader capable of to raise as much money as he needs to pursue his visions. He sparred violently with a shareholder attorney, Nicholas Porritt, who had expressed anger earlier in the trial.
On two separate occasions Tuesday, under Spiro’s gentle prodding, Musk left no doubt about his contempt for Porritt with a comment questioning whether the lawyer was looking out for the best interests of Tesla shareholders. The comments were swiftly reprimanded by the judge and struck off the record. “It’s inappropriate,” Chen Musk admonished at one point.
When challenged by Porritt, Musk purposefully averted his gaze from the attorney and gave his explanation while looking straight at the jurors seated a few feet to his right. In another instance, without elaborating further, Musk claimed that a question asked by Porritt who wondered if he had ever caused investors to suffer losses contained “untruths.”
On the other hand, Spiro at one point mistakenly addressed Musk as “your honor” while asking the billionaire how much money he had made for investors during his career. The oversight sparked a moment of levity in the San Francisco courtroom, filled with media outlets and other onlookers gathered to listen to Musk, who has become even more famous since completing his $44 billion purchase of Twitter in October.
The current lawsuit hinges on whether a pair of tweets Musk posted on Aug. 7, 2018, damaged Tesla shareholders during a 10-day period prior to his admission that the buyout he envisioned would not happen. The statements led to Musk and Tesla reaching the $40 million settlement without admitting any wrongdoing.
In the first of 2018’s tweets, Musk stated “funding assured” for what would have been a $72 billion — or $420 per share — buyout of Tesla at a time when the electric carmaker was still struggling with production issues and worth much less than it is today. Musk followed up with another tweet a few hours later suggesting a deal was imminent.
After those tweets, Musk stated that Tesla would remain in public for a few weeks after that. A month later, Musk and Tesla reached a $40 million settlement with securities regulators who claimed the tweets were misleading.
Musk has previously claimed he entered into the settlement under duress and claims he never wavered in his belief that he had the money for a deal.
Musk spent most of Tuesday trying to convince the jurors that there was nothing devious about the two tweets that indicated he had lined up the money to take Tesla private, as the electric car maker faced production problems and was worth much less than it is now. The judge has already ruled that the jurors can consider those two tweets false, leaving them to decide whether Musk deliberately misled investors and whether his statements left them with losses.
While directed by Spiro, Musk told jurors he had only stated that he was “considering” a Tesla acquisition, but never promised a deal would be made. But, Musk said, he felt it was important to alert investors that Tesla is about to end its eight-year run as a publicly traded company.
“I had no bad motive,” Musk said. “It was my intention to do the right thing for all shareholders.”
While grilled by Porritt the day before, Musk was belligerent, outraged and annoyed at times. Throughout it all, Musk has insisted he lock in financial support for what would have been a $72 billion buyout of Tesla in 2018 meetings with Saudi public investment fund representatives, though no specific funding amount or price was specified. discussed.
When he received texts and emails indicating that a Saudi fund representative had never pledged the money for a full buyout of Tesla, Musk claimed it was nothing more than the words of someone trying to back out on an earlier promise made in private conversations.
Not long after Porritt resumed his questioning on Tuesday, Musk again scoffed at the idea that his belief that he had the financial backing of Saudi funding wasn’t enough for him to tweet about a potential Tesla takeover.
“We are talking about the Kingdom of Saudi Arabia,” Musk testified. “They can buy Tesla multiple times. This was not a big amount for them.”
Musk also repeated previous testimony that he could fund a Tesla buyout by sharing some of his stake in SpaceX, a private rocket ship maker he also started. That would be similar to what he did when he bought Twitter, which saw him sell about $23 billion of his Tesla stock.
That’s something Musk said Tuesday he didn’t want to do, but showed he had the resources to pull together purchases for expensive deals. Musk’s ownership of Twitter has also proved unpopular with Tesla shareholders who worry he will be distracted as the automaker faces more competition. Tesla stock has lost about a third of its value since Musk took over Twitter.
Despite that downturn, the stock is still worth about seven times what it was at the time of Musk’s tweets in 2018, after adjusting for two splits that have since occurred. That opened the door for Musk to remind jurors on Tuesday that any investor who owned Tesla stock in August 2018 would have done “exceedingly well” had they simply held on to the stock.
“It would have been the best investment in the stock market,” Musk said.