Elon Musk testified on Friday as part of a trial over a 2018 tweet in which he claimed to have “funding secured” to take Tesla private, a tweet that shareholders allege cost them millions in trading losses.
The Tesla CEO appeared in a San Francisco federal courtroom and defended himself by saying that “just because I tweet something does not mean people believe it or will act accordingly”.
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 did not always affect Tesla stock the way he expected.
The class-action trial in San Francisco federal court centers on allegations that the Tesla CEO lied when he sent the tweet, costing investors. Earlier on Friday morning, investor Timothy Fries told the jury how he lost $5,000 buying Tesla stock after Musk sent the tweet at the center of the lawsuit.
The case is a rare securities class-action trial and the plaintiffs have already cleared high legal hurdles, with the US judge Edward Chen ruling last year that Musk’s post was untruthful and reckless.
Fries told the jury that funding secured meant to him that “there had been some vetting, some critical review of those funding sources”.
Musk, wearing a dark suit over a white button-down shirt, testified for less than 30 minutes before court adjourned until Monday. He spoke softly and in a sometimes bemused manner, a contrast to his occasional combative testimony in past trials.
Musk described the difficulties the company went through around the time he sent the “funding secured” tweet, including bets by short-sellers that the stock would fall.
“A bunch of sharks on Wall Street wanted Tesla to die, very badly,” he said, describing short-sellers, who profit when a stock falls in price.
Musk’s attorney, Alex Spiro, told the jury in his opening statement on Wednesday that Musk believed he had financing from Saudi backers and was taking steps to make the deal happen. Fearing leaks to the media, Musk tried to protect the “everyday shareholder” by sending the tweet, which contained “technical inaccuracies”, Spiro said.
Guhan Subramanian, a Harvard Law School professor, told the jury that Musk’s behavior in 2018 lacked the hallmarks of traditional corporate dealmaking by tweeting his interest in Tesla without proper financial or legal analysis.
“Compared to the standard template it’s an extreme outlier,” said Subramanian, who called Musk’s approach “unprecedented” and “incoherent”.
A jury of nine will decide whether the tweet artificially inflated Tesla’s share price by playing up the status of funding for the deal, 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.
Reuters contributed to this report
• This article was amended on 22 January 2023. Elon Musk is a co-founder of Tesla and not the founder as an earlier subheading and photograph caption said.
