Little leeway with 240 characters?
Musk downplays the power of his tweets
01/21/2023 11:57 am
Elon Musk panicked Tesla shareholders in 2018 with rushed announcements on Twitter about Tesla’s IPO. Some want to sue for the losses caused by the subsequent price fluctuations. However, the Tesla boss does not want to know anything about the immense influence of his tweets.
In the process of fraud allegations by investors against Tesla boss Elon Musk, the tech billionaire himself was called to the witness stand. However, not much came of it at first: About half an hour after Musk’s questioning by the plaintiff’s lawyer yesterday, the court adjourned until Monday.
Tesla boss Elon Musk had to testify in court.
(Photo: Vicki Behringer/Vicki Behringer/)
The case relates to Musk’s August 2018 tweet rushing to announce that he intends to take the electric car company public and has secured funding to do so. Later it turned out that there were no firm commitments from investors. Investors are basing their class action lawsuit against Musk and Tesla’s board of directors on this. The false tweets triggered price swings that caused them to lose money, they argue.
The short time on the witness stand yesterday allowed some glimpses of Musk’s line of defence. He insisted that the 240-character length of the Twitter messages did not allow for detailed explanations. His lawyer had already said in the opening speech that the phrase “financing secured” was only due to an unfortunate choice of words under time pressure, while Musk meant something else. The lawyer for the plaintiffs reminded the Tesla boss in the survey that he also had to provide correct information about his company on Twitter.
Musk ignored tips from confidants
At the same time, Musk tried to question the general impact of his tweets on investors. “Just because I tweet something doesn’t mean people will believe it or act on it,” he said. He once wrote on Twitter that he thought Tesla shares were too expensive – and the price continued to rise afterwards, Musk said. In fact, on the day in May 2020 following Musk’s tweet, the stock had initially fallen over 10 percent before later bouncing back.
The plaintiff’s attorney also pointed out that in July 2018, Musk’s confidants recommended that he tweet less or not at all. The 51-year-old initially said he couldn’t remember. But after he read statements from the confidants “to refresh the memory”, he did not deny it. He obviously didn’t comply, Musk said.
Judge Edward Chen found in the proceedings last year that Musk’s statements in the tweets were not true. While the jury is made aware of this at trial, it is expected to evaluate whether those statements were relevant to investors – and harmed them by relying on them. They also need to determine whether Musk was aware that he was making false statements.
The tweets had already caused serious trouble for Musk and Tesla. The 51-year-old and the company each paid fines of $20 million for misleading investors, according to the SEC’s investigation. In addition, Musk had to give up the chairmanship of the board of directors and undertake to have Tesla approve potentially price-sensitive tweets.