Elon Musk is either a liar who cost investors millions, or a visionary who simply misspoke.
During day one of a class action revolving around a 2018 tweet that claimed Musk had secured funding to take Tesla private, a nine-person jury heard that Elon Musk lied about a potential $103 billion buyout, costing investors millions of dollars.
The jury were also told the lies were nothing but a “thought bubble” from a “rushed, reckless” visionary.
In the August 7, 2018 tweet, Musk announced: “Am considering taking Tesla private at $420 (US). Funding secured”.
Tesla stock jumped 13 per cent, prompting buyers to jump on the stock quickly – which resulted in massive losses when Musk announced he was keeping Tesla public a few weeks, and the stock price immediately tanked.
71-year-old investor Glen Littleton launched a class action suit against Elon Musk, Tesla, and members of Tesla’s board at the time, on the basis that this tweet was false, and cost investors billions of dollars.
“Why are we here?” asked Nicholas Porritt, the lawyer representing Littleton and the other Tesla shareholders involved in the action.
“We are here because Elon Musk, chairman and chief executive of Tesla, lied. His lies caused regular people like Glen Littleton to lose millions and millions of dollars,” adding the move also hurt pension funds.
“There was no dispute that Elon Musk lied,” he said, referring to a August 2018 ruling that found Musk’s statement was false and made recklessly.
“And there was no dispute that Tesla investors were hurt by these lies. How were they hurt? They lost lots of money in a short period, from August 7 to August 17, 10 days, because of Elon Musk’s lies.
“Tesla’s stock price shot up. Millions of shares were bought,” Porritt said.
“But then the stock price tanked almost as quickly as it went up and millions of dollars were lost when his lies were exposed.
“The question for you, the jury, is to decide whether Elon Musk and Tesla and its board of directors should be held responsible for the hurt and the harm that were caused by his lies.”
Littleton was called as the first witness. He explained he saw the value of his Tesla portfolio plunge by 75 per cent after the tweet spooked investors.
“The damage was done. I was in a state of shock”, Littleton said, stating he believed a buyout was “inevitable” given Musk’s wording.
“‘Funding secured’ was the only thing that mattered to me,” Littleton testified.
“That was such a defining statement.”
According to Elon Musk’s lawyer Alex Spiro, Musk was in “advanced talks” with Saudi Arabia’s Public Investment Fund to take Tesla private, and believed the funding was secured.
After the Financial Times reported the PIF had acquired a A$2.8 billion stake in Tesla, Musk responded with the tweet.
“He didn’t plan to tweet this,” Musk’s lawyer Alex Spiro said. “It was a split-second decision.”
“You’re all going to see this for what this is, because nothing is ever going to change the ultimate truth,” Spiro continued.
“Mr. Musk was considering taking Tesla private. He was more than just considering it. He had made a bid, however informal, to his board to take it private.
“Mr. Musk quickly tweeted his thoughts… to get the full state of play as quickly as he could out to the world,” Spiro said. “‘Am considering.’ It’s not even a full sentence. It’s a thought bubble.”
“Because of the leak, because Mr. Musk was thinking aloud, he rushed. He rushed and in his rushed, reckless state, he tweeted the wrong word choice.
“In his mind, funding wasn’t an issue. It was secured. But what he said in that tweet was ‘funding secured’ without elaborating on what that meant to him. He could have, should have said funding wouldn’t be an issue.”
According to AP, Musk may appear on the stand before the end of the week, as he appears on both witness lists.
Among those who could also be called to testify are Oracle co-founder Larry Ellison, Rupert Murdoch’s son James Murdoch, and Elon’s brother Kimbal Musk.
The trial is expected to go for three weeks..
