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Musk testifies in fraud trial, points out that not everyone believes what he says

Elon Musk wearing a suit while leaving a courthouse during a 2021 trial.
Enlarge / Tesla CEO Elon Musk leaves court during the SolarCity trial in Wilmington, Delaware, on July 12, 2021.

Getty Images | Bloomberg

Elon Musk began testifying today in the jury trial over whether his false 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 go up or down. “Just because I tweet something does not mean people believe it or will act accordingly,” Musk said in response to a question from attorney Nicholas Porritt, who represents investors in the class-action lawsuit against Musk.

“It’s difficult to say that the stock price is linked to the tweets. There have been many cases where I thought if I were to tweet something that the stock price would go down,” the Tesla 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 today said Tesla’s stock price “counterintuitively” went up after the tweet.

“Even though I tweeted that, in my opinion, the stock price was too high, the stock price then went up from that,” Musk said today. “You’d think that if I tweeted the stock price was too high, it would go down, but it actually went up.”

In fact, Tesla’s stock price dropped 10 percent on the day Musk made that tweet, though the price did go back up the following week.

“What I’m trying to say is the causal relationship is clearly not there simply because of a tweet,” Musk said in court today.

“Funding secured” tweet was false, judge ruled

The current case is primarily about two tweets Musk made on August 7, 2018. The first said, “Am considering taking Tesla private at $420. Funding secured.” The second tweet said, “Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.”

Musk only testified for less than a half hour today but will retake the stand on Monday. Because of that, Porritt hasn’t yet 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 made recklessly. Before today’s testimony began, Chen reminded the jury that they must assume that the tweets were false.

However, the jury still must decide whether Musk knew they were untrue and whether the tweets gave reasonable investors an impression of Tesla’s situation that was different from reality, Chen said. The case is being held in US District Court for the Northern District of California.

Before Musk started testifying today, 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 near the end of the trial day.

During opening statements on Wednesday, Musk’s lawyer Alex Spiro argued that Musk’s false tweets were just “technical wordsmith inaccuracies” and weren’t material to investors. Porritt said that investors bought Tesla stock based on Musk’s claim that he’d secured funding to take the company private at $420 a share.

“There was no dispute that Elon Musk lied, and there was no dispute that Tesla investors were hurt by these lies,” Porritt said.

Musk: “You are trying to conflate misleading with short”

Today, Porritt asked Musk if he’s aware that his tweets about Tesla are governed by federal securities laws requiring them to be accurate, just like press releases and Securities and Exchange Commission filings.

“Yes, but obviously, there is a limit if you have 240 characters to what you can say. You can obviously be far more verbose in a filing, and everyone on Twitter understands that,” Musk answered. (Twitter’s character limit is 280 characters, but Musk repeatedly said it was 240 characters during his testimony.)

Porritt responded, “There’s no exception in SEC rules based on the character limitation on Twitter, is there?”

“There isn’t, but I think one cannot ignore the character limitation and everyone on Twitter is aware of the character limitation,” Musk said. “I think you can absolutely be truthful. But can you be comprehensive? Of course not,” Musk said in response to another question.

Musk accused Porritt of asking misleading questions. “The tweets are truthful. They are simply short. I think you are trying to conflate misleading with short. That’s misleading,” Musk said.

“The tweets are information that I think the public should hear,” Musk also said.

In response to other questions, Musk also discussed short sellers in the context of why he wanted to take Tesla private in 2018. “I believe that short selling should be made illegal. It is a means for bad people on Wall Street to steal money from small investors,” Musk said.

Short sellers “want Tesla to die” and “plant false stories in the media to get the stock to go down and do anything in their power to make the company die. It’s evil,” Musk said.

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