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Elon Musk began testifying today in the jury trial about whether his phony tweets in 2018 about taking Tesla private caused investors to lose billions of dollars.
During testimony in a federal courtroom in San Francisco, Musk denied that his tweets cause Tesla’s stock price to rise or fall. “Just because I tweet something doesn’t mean people will believe it or act accordingly,” 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 tied to the tweets. There have been many cases where I thought if I tweeted something the stock price would go down,” Tesla’s CEO said on the witness stand.
Musk brought up a tweet in May 2020 in which he wrote, “Tesla stock price is too high imo.” Musk said today Tesla’s stock price went up “counterintuitively” after the tweet.
“Even though I tweeted that the stock price was too high in my opinion, the stock price went up after that,” Musk said today. “You would think if I tweeted that the stock price was too high it would fall, but it actually went up.”
In fact, Tesla’s stock price fell 10 percent the day Musk posted that tweet, though the price went back up the following week.
“What I’m trying to say is that the causal link is clearly not there because of a tweet,” Musk said in court today.
The tweet ‘Financing assured’ was incorrect, the judge ruled
The current case is primarily about two tweets Musk made on August 7, 2018. The first said, “Consider taking Tesla private for $420. Funding secured.” The second tweet said, “Investor support is confirmed. The only reason this is not certain is that it depends on a shareholder vote.”
Musk only testified for less than half an hour today, but will take the stand again on Monday. That’s why Porritt hasn’t questioned Musk about the specific tweets this case is about.
Judge Edward Chen already ruled that the two tweets about taking Tesla private were false and reckless. Before today’s testimony began, Chen reminded the jury to assume the tweets were false.
However, the jury is yet to decide whether Musk knew they were untrue and whether the tweets gave reasonable investors an impression of Tesla’s situation that differed from reality, Chen said. The case is being held in the US District Court for the Northern District of California.
Before Musk began testifying today, the jurors 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 toward the end of the trial day.
During opening statements on Wednesday, Musk’s attorney Alex Spiro argued that Musk’s bogus tweets were merely “technical inaccuracies” and irrelevant to investors. Porritt said investors bought Tesla stock based on Musk’s claim that he secured funding to take the company private at $420 per share.
“There was no disputing that Elon Musk lied, and there was no disputing that Tesla investors were hurt by these lies,” Porritt said.
Musk: “You’re trying to confuse deception with short”
Today, Porritt asked Musk if he is aware that his tweets about Tesla fall under federal securities laws that require them to be accurate, as are press releases and filings with the Securities and Exchange Commission.
“Yeah, but of course there’s a limit if you have 240 characters for what you can say. You can of course be much more verbose in a request, 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 the character restriction on Twitter, right?”
“There isn’t, but I don’t think one can ignore the character constraint and everyone on Twitter is aware of the character constraint,” Musk said. “I think you can be absolutely truthful. But can you be all-encompassing? Of course not,” Musk said in response to another question.
Musk accused Porritt of asking misleading questions. “The tweets are truthful. They’re just short. I think you’re trying to confuse misleading with short. That’s misleading,” Musk said.
“The tweets are information I think the public should hear,” Musk also said.
In response to other questions, Musk also addressed short sellers as part of why he wanted to take Tesla private in 2018. “I think short selling should be made illegal. It’s a tool for bad people 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 make the stock fall and do everything in their power to make the company die. It’s bad,” Musk said.
