Elon Musk began testifying in a jury trial today about whether his bogus tweets in 2018 about Tesla’s privatization caused investors to lose billions of dollars.
During his testimony in a federal courtroom in San Francisco, Musk denied that his tweets make Tesla’s stock price rise or fall. “Just because I tweet something doesn’t mean people believe it or act on it,” Musk said in response to a question from attorney Nicholas Porritt, who is representing investors in the class action lawsuit against Musk.
“It’s hard to say that the stock price is linked to the tweets. There have been many instances where I thought if I tweeted something, the stock price would go down,” the Tesla CEO said on the witness stand.
Musk brought up a tweet in May 2020 in which he wrote, “Tesla share price is too high imo.” Musk said Tesla’s stock price rose “counterintuitively” after the tweet.
“Even though I tweeted that I thought the stock price was too high, the stock price went up,” Musk said today. “You’d think if I tweeted that the stock price was too high, it would go down, but it actually went up.”
In fact, Tesla’s stock price fell 10 percent the day Musk tweeted that, although the price rebounded the following week.
“What I’m trying to say is that just because of a tweet, the causal link is clearly not there,” Musk said in court today.
The “funding secured” tweet was false, the judge ruled
The current case is primarily about two tweets that Musk submitted on August 7, 2018 first said: “I am considering privatizing Tesla for $420. Funding secured.” The second tweet said: “Investor support is confirmed. The only reason this is not certain is that it is subject to a shareholder vote.”
Musk only testified for less than half an hour today, but will testify again on Monday. For this reason, Porritt has not yet questioned Musk about the specific tweets at issue in this case.
Judge Edward Chen has already ruled that the two tweets about Tesla’s privatization were recklessly and recklessly made. Before today’s testimony began, Chen reminded the jury to assume the tweets were false.
However, the jury has yet to determine whether Musk knew they were wrong and whether the tweets gave reasonable investors a different view of Tesla’s situation from reality, Chen said. The case is being tried in the US District Court for the Northern District of California.
Before Musk began testifying today, the jury heard from two other witnesses called by plaintiffs — an investor who bought Tesla stock after Musk’s tweets and an expert witness who testified about management buyouts. Musk’s testimony began towards the end of the trial day.
During Wednesday’s opening remarks, Musk’s attorney, Alex Spiro, argued that Musk’s false tweets were just “technical wordsmithing inaccuracies” and not relevant to investors. Porritt said investors bought shares in Tesla based on Musk’s claim that he secured funding to take the company private at $420 a share.
“There was no doubt that Elon Musk lied, and there was no doubt that Tesla investors were hurt by those lies,” Porritt said.
Musk: ‘You’re trying to misleadingly confuse short’
Today, Porritt asked Musk if he was aware that his tweets about Tesla are subject to federal securities laws, which require their accuracy, just like press releases and filings with the Securities and Exchange Commission.
“Yes, but of course there’s a limit when you have 240 characters to what you can say. You can, of course, be far more detailed in a submission, and everyone on Twitter understands that,” Musk replied. (Twitter’s character limit is 280 characters, but Musk repeatedly said it was 240 characters during his testimony.)
Porritt replied, “There’s no exception in the SEC rules based on Twitter’s character limit, is there?”
“There isn’t, but I don’t think you can ignore the character limit and everyone on Twitter is aware of the character limit,” Musk said. “I think you can be perfectly honest. But can you be comprehensive? Of course not,” Musk replied to another question.
Musk accused Porritt of asking misleading questions. “The tweets are truthful. They’re just short. I think you are trying to confuse misleadingly with short. That’s misleading,” Musk said.
“The tweets are information that I think the public should hear,” Musk said.
In response to other questions, Musk also discussed short sellers in the context of why he wanted to privatize Tesla in 2018. “I believe that short selling should be made illegal. It’s a vehicle for bad guys on Wall Street to steal money from small investors,” Musk said.
Short sellers “want Tesla to die” and “spread false stories in the media to crash the stock, doing everything in their power to let the company die.” That’s evil,” Musk said.