Tesla Inc. CEO Elon Musk finished testifying Tuesday in the trial of a securities-fraud lawsuit over his August 2018 tweet about taking the company private. Here are the key takeaways:
(Bloomberg) — Tesla Inc. CEO Elon Musk finished testifying Tuesday in the trial of a securities-fraud lawsuit over his August 2018 tweet about taking the company private. Here are the key takeaways:
- Musk appeared to be in better spirits today than Monday, making more eye contact with jurors in an attempt to connect with them. The questioning over more than two hours also felt smoother and stronger. Nicholas Porritt, the plaintiffs’ lawyer, wasn’t able to get in many punches during the redirect.
- Musk’s appearance in this civil case didn’t attract the same crowds to the courtroom as the criminal case against another big name in Silicon Valley, Elizabeth Holmes, who was convicted of fraud a year ago. Holmes faces a long prison sentence, while Musk, if he loses, may be liable for monetary damages.
- Musk maintained that his initial take-private tweet was intended to alert small investors about his plans after learning the Financial Times planned to publish a story detailing the Saudi Public Investment Fund acquiring a 3%-5% stake in Tesla.
- Musk said the tweet reflects “absolutely what I believed” at the time, and emphasized again that it wasn’t a done deal. “That’s what one means when they say they’re considering. They’re thinking about it, but they’ve not made a decision about it one way or the other.”
- Musk reiterated his role was as the primary bidder for going private, and Tesla’s board would represent the company and shareholders.
- He also said he wanted existing Tesla shareholders to have the option to remain invested in Tesla as a private company.
- Musk insisted he had no ill motive in issuing his tweets and “thought” he “was doing the right thing.”
- Musk’s lawyer Alex Spiro pointed to written exchanges between Musk and big names in corporate finance who supported his plans to go private, including Dan Dees, co-head of global banking and markets at Goldman Sachs, and Oracle Corp. CEO Larry Ellison, a fellow billionaire. Dees emailed Musk in an Aug. 7 email about the Tesla CEO’s blog post explaining the deal: “I thought your letter today was excellent. Very clear.”
- Dees may testify at the trial.
- Musk insisted he had verbal commitments from funders for going private, but acknowledged none had committed to a specific dollar amount. The judge stepped in twice to demand he answer yes or no to the question of whether they discussed a specific number. “Not a specific number,” he said.
- Musk said the “salient” point was that investor Ron Baron as well as the “Kingdom of Saudi Arabia” committed to financing the transaction.
- He said he couldn’t offer a specific number because “we needed to talk to all the investors to see which ones wanted to stay in the private company and not in the public company.” He said PIF “would take Tesla private no matter what.”
- Musk said his 60% holding in privately held SpaceX was worth about $15 billion to $20 billion in 2018, and could have used that to help take Tesla private. “It’s not something I’d ideally like to do but it’s something I could do.”
- Porritt asked Musk why he made no mention of SpaceX option in his sworn response in April 2021 to questions from the plaintiffs. Musk said that was an “error” on his part, and that he thought they were asking about outside sources of funding — not his personal sources.
- Musk said more funding was available than required for the going-private transaction, but he ultimately scuttled the plan on Aug. 24, 2018, because smaller investors “said they would prefer Tesla remain public.” He said, “I felt it was important to be responsive to their wishes.”
- Musk was asked if he had any regrets that investors lost money because of his tweets. “Obviously I would be sad about that,” he said. “But investors in public markets buy and sell stock all the time. On balance, they’ve done extremely well.”
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–With assistance from Joel Rosenblatt, Malathi Nayak and Dana Hull.
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