SAN FRANCISCO (AP) 鈥� Elon Musk took the witness stand Friday to defend a 2018 tweet claiming he had lined up the financing to take Tesla private in a deal that never came close to happening.
The tweet resulted in a with securities regulators. It also led to a class-action lawsuit alleging he misled investors, pulling him into court for about a half hour Friday to deliver sworn testimony in front of a nine-person jury and a full room of media and other spectators.
The trial was then adjourned for the weekend and Musk was told to return Monday to answer more questions.
In his initial appearance on the stand, Musk defended his prolific tweeting as 鈥渢he most democratic way鈥� to distribute information even while acknowledging constraints of Twitter's 280-character limit can make it difficult to make everything as clear as possible.
鈥淚 think you can absolutely be truthful (on Twitter),鈥� Musk asserted on the stand. 鈥淏ut can you be comprehensive? Of course not,鈥�
Musk's latest headache stems from the inherent brevity on Twitter, a service that he has been running since completing his $44 billion purchase of it in October.
The trial hinges on the question of whether a pair of tweets that Musk posted on Aug. 7, 2018, damaged Tesla shareholders during a 10-day period leading up to a Musk admission that the buyout he had envisioned wasn鈥檛 going to happen.
In the first of those those two 2018 tweets, Musk for a what would have been a $72 billion buyout of Tesla at a time when the electric automaker was still grapping with production problems and was worth far less than it is now. Musk followed up a few hours later with suggesting a deal was imminent.
After it became apparent that the money wasn't in place to take Tesla private, Musk stepped down as Tesla鈥檚 chairman while remaining CEO as part of the Securities and Exchange Commission settlement, without acknowledging any wrongdoing.
The impulsive billionaire came into court wearing a dark suit and tie on the third day of the civil trial in San Francisco that his lawyer , where Tesla is now headquartered, on the premise that media coverage of his tumultuous takeover of Twitter had tainted the jury pool.
The jury that was assembled earlier this week focused intently on Musk while he answered questions posed by Nicholas Porritt, a lawyer representing Tesla shareholders. At one point, Musk asked Porritt if he would speak closer to the microphone so he could hear him better. At other times, Musk craned his neck as he gazed around the courtroom.
Musk, 51, said he cares 鈥渁 great deal鈥� about investors and also railed against short sellers who make investments that reward them when a company's stock price falls. He called short selling an 鈥渆vil鈥� practice that should be outlawed, denigrating those who profit from it as 鈥渁 bunch of sharks."
When shown communications from Tesla investors urging him to curtail or completely stop his Twitter habit before the 2018 buyout tweet, Musk said he couldn't remember all those interactions from years ago, especially since he gets a 鈥淣iagara Falls" of emails.
Even before Musk took the stand, U.S. District Judge Edward Chen had declared that the jurors can consider those two tweets , leaving them to decide whether Musk deliberately deceived investors and whether his statements saddled them with losses.
Musk has previously contended he entered into the SEC settlement under duress and maintained he believed he had locked up financial backing for a Tesla buyout during meetings with representatives from Saudi Arabia鈥檚 Public Investment Fund.
An expert on corporate buyouts hired by shareholder lawyers to study the events surrounding Musk's proposal to take Tesla private spent the bulk of his three hours on the stand Friday deriding the plan as an ill-conceived concept.
鈥淭his proposal was an extreme outlier,鈥� said Guhan Subramanian, a Harvard University business and law professor for more than 20 years. 鈥淚t was incoherent. It was illusory.鈥�
In a lengthy cross examination that delayed Musk's appearance, a lawyer for Tesla's board of directors tried to undermine Subramanian's testimony by pointing out that it relied on graduate student assistance to review some of the material related to the August 2018 tweets. The lawyer, William Price, also noted Subramanian's $1,900-per-hour fee for compiling his report for the case.
The trial over his Tesla tweets come at a time when Musk has been focusing on Twitter while also serving as the automaker's CEO and also remaining deeply involved in SpaceX, the rocket ship company he founded.
Musk鈥檚 leadership of Twitter 鈥� where he has and alienated users and 鈥� has proven unpopular among Tesla鈥檚 current stockholders, who are worried he has been devoting less time steering the automaker at a time of intensifying competition. Those concerns contributed to a 65% decline in Tesla鈥檚 stock last year that wiped out more than $700 billion in shareholder wealth 鈥� far more than the $14 billion swing in fortune that occurred between the company鈥檚 high and low stock prices during the Aug. 7-17, 2018 period covered in the class-action lawsuit.
Tesla鈥檚 stock has split twice since then, making the $420 buyout price cited in his 2018 tweet worth $28 on adjusted basis now. The company's shares were trading around $133.42 Friday, down from the company鈥檚 November 2021 split-adjusted peak of $414.50.
After Musk dropped the idea of a Tesla buyout, the company overcame its production problems, resulting in a rapid upturn in car sales that caused its stock to soar and minted Musk as the world鈥檚 richest person until he bought Twitter. Musk dropped from the top spot on the wealth list after the stock market鈥檚 backlash to his handling of Twitter.
When asked Friday about the challenges that Tesla faced in 2018, he recalled spending many nights sleeping at the automaker's California factory as he tried to keep the company afloat.
鈥淭he sheer level of pain to make Tesla successful during that 2017, 2018 period was excruciating," he recalled.
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This story has been updated to correct that Twitter鈥檚 character limit is 280 characters, not 240.
Michael Liedtke, The Associated Press
