If an auspicious beginning shortens the odds for a fairly satisfying end, Elon Musk apparently did not receive the proverbial memo, as he chose to begin the crux of his in-person testimony in the ongoing “funding secured” trial with an embarrassing gaffe.
For those who might be unaware, Elon Musk is currently on trial for inflicting losses on Tesla’s shareholders via a haphazard tweet back in 2018. As Tesla contended with production-related kinks and increased pressure from short-sellers, Elon Musk had tweeted on the 07th of August 2018 that he was taking Tesla private at $420 per share.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Ten days later, Elon Musk admitted that the buyout was not happening. Later on, Musk and Tesla reached a $40 million settlement with the SEC without admitting any wrongdoing.
The current trial is being spearheaded by some of the aggrieved shareholders of Tesla who suffered material losses in this fracas. Bear in mind that the presiding judge has already declared that the jurors can consider the two tweets in question to be false.
This brings us to the crux of the matter. While Elon Musk only spoke for a few minutes on Friday, the trial commenced in the true sense only on Monday, with Elon Musk’s in-person testimony taking place over the past two days.
another morning at the tesla trial
doing am things making sure musk’s rest space has “complete isolation”
apparently musk parked in someone’s parking space yesterday lol
spiro says he doesn’t keep track of where he is, and chen asks: who does keep track of where he is?
— Chance the Lawyer and 302 others (@chancery_daily) January 24, 2023
On Monday, eyewitnesses reported that Elon Musk had parked his Tesla in the wrong spot. Some reports suggest that Musk’s Tesla was, in fact, parked in a judge’s reserved spot. Fairly daring, if true.
to be fair, anything that begins with musk belong blasé and plunking his Tesla in a judge’s parking spot is bound to be a banger https://t.co/9nutQatKFE
— Chance the Lawyer and 302 others (@chancery_daily) January 24, 2023
Elon Musk has spent much of his testimony defending his conduct during the 2018 period in question.
Musk is answering questions about his discussions with the Saudi’s Public Investment Fund about taking Tesla private, saying he was under the impression they would fund the deal.
— Andrew J. Hawkins (@andyjayhawk) January 23, 2023
On Monday, Elon Musk faced hard-hitting questions from Nicholas Porritt, the attorney representing Tesla’s shareholders. Specifically, Porritt spent a lot of time questioning Musk regarding his discussions with the Saudi PIF. Bear in mind that, according to Musk, the Saudis had reneged on their commitment to take Tesla private.
Lawyer: “You would agree that’s not a great reason to pick a price for a potential multibillion dollar going private transaction correct?”
Elon: “420 was a coincidence.”
— Andrew J. Hawkins (@andyjayhawk) January 23, 2023
When asked about the seemingly arbitrary $420 per share deal price, Musk retorted that the price constituted a 20 percent premium to Tesla’s share price at the time and that any reference to World Marijuana Day was merely a “coincidence.” Elon Musk also conceded that Tesla’s board did not authorize his “funding secured” tweet but contended that a detailed discussion with the board could have been interpreted as collusion owing to the latter’s counterparty status in the deal.
Musk said he was concerned that if the Financial Times knew about the Saudi’s potential investment in Tesla, he was also concerned that the paper knew about the take private deal, which he claims was real.
— Andrew J. Hawkins (@andyjayhawk) January 23, 2023
Shedding light on the background surrounding his actions, Elon Musk clarified that his tweet was meant to preempt media disclosure of his plans to take Tesla private. Musk believed that the deal with the Saudis was very much in place and that the shareholders needed to know his intention. Interestingly, while parsing the wording of his tweets, Elon Musk noted:
“I’m saying that I am considering… not that it will happen. But that I’m thinking about it, taking Tesla private at $420. And that, in my opinion, funding is secured for taking as a private app at that price.”
Elon Musk also declared that the Saudi PIF formed merely one part of the proverbial cog. Theoretically, the CEO of Tesla could have taken the EV giant private by selling his stake in SpaceX. Here, Mr. Porritt interjected that Musk had made no mention of his stake in SpaceX in his November deposition while under oath.
Now we’ve come to the texts between Musk and the Saudi PIF governor in which Musk accused him of throwing him under the bus. Musk says the texts are being taken out of context.
(Our story from the time https://t.co/Iqyb0eAB5I)
— Andrew J. Hawkins (@andyjayhawk) January 23, 2023
Then, on Tuesday, when shown his angry texts directed at the Saudi PIF, Elon Musk responded that those messages were being taken out of context. During his testimony, the CEO of Tesla describes the conduct of the head of Saudi PIF as one involving “ass-covering” and “backpedaling.” While the plaintiffs’ lawyer argued that the Saudi PIF backed out of its commitment as there was really no deal in place at the time, Musk retorted that the Saudi sovereign wealth fund suffered from the proverbial cold feet after his tweets.
Musk: “No. What I’m saying is that one should expect consistency.”
— Andrew J. Hawkins (@andyjayhawk) January 23, 2023
When pressed as to why there was no documentation if the deal with the Saudi PIF was already in place, Musk responded that there was minimal documentation when the sovereign wealth fund was planning to acquire a 5 percent stake in Tesla, in essence, seeking to portray his expectations vis-à-vis the PIF as a matter of consistency.
Musk argues that he felt he had the support of Larry Ellison and the PIF, but the lawyer counters that he didn’t confirm the $420 with either of them.
— Andrew J. Hawkins (@andyjayhawk) January 23, 2023
Toward the end, the plaintiffs’ lawyer asked whether Elon Musk had confirmed investor support for his deal before tweeting. Musk responded that he felt he had the support of Larry Ellison and the Saudi PIF. To this, the attorney retorted that Musk had not confirmed the $420 per share deal price with those key stakeholders prior to firing the two tweets in question. As a refresher, Musk had disclosed in his deposition last year that there was a “standing interest” from Google/Alphabet in acquiring Tesla. Combined with his SpaceX stake, Musk feels that he did have a viable path to take Tesla private.
This has come up a bunch in testimony, so it’s worth spelling it out: Musk seems to believe that the fact that he once tweeted that Tesla stock price was too high but it immediately went higher absolves him of any subsequent attempt to manipulate the stock price by tweet. https://t.co/K0bsyHigzL
— E.W. Niedermeyer (@Tweetermeyer) January 23, 2023
In other interesting tidbits, Elon Musk tried to justify that his tweets had no real bearing on Tesla shares by recalling an incident where he had once tweeted that Tesla’s share price was too high, and the stock had climbed even higher in response.
2/Biggest risks: Bad PR if Elon loses, more Elon $TSLA sales. A big verdict can be settled or appealed. Judge Edward Chen already ruled that Elon’s 2018 tweet was false and reckless. Jury has to decide whether tweet was material and did he know it was false. $420 bid=$28 today. https://t.co/dsUasklKjp
— Gary Black (@garyblack00) January 19, 2023
It is unlikely that U.S. District Judge Edward Chen will call Elon Musk again for testimony. At best, the Tesla board is on the hook for an adverse award. A negative judgment does carry reputational risks for Elon Musk and Tesla.
The post It Began When Elon Musk Reportedly Parked His Tesla in the Wrong Spot… by Rohail Saleem appeared first on Wccftech.
