On Friday, a US Jury found out that Tesla Inc CEO Elon Musk and his company were not chargeable for deceiving investors when Musk tweeted in 2018 that he had lined up funding to take the electric car company private.
Complainants had asserted losing billions in damages and the decision also had been seen as significant for Musk himself, who has often defended his ability to tweet broadly. The jury reached a verdict within two hours of deliberations.
Musk’s lawyer, Alex Spiro told reporters after the verdict, “The jury got it right.” He refused to say anything more. Musk was not present in court when the verdict was read. In a statement, Nicholas Porritt, a lawyer for the investors, said “We are disappointed with the verdict and are considering next steps.”
Tesla’s shares surged by 1.7% in after-hours trading following the verdict.
Wedbush analyst Dan Ives said, “This is a clear positive with background noise clearing on Tesla from the 2018 tweet saga. A dark chapter is now closed for Musk and Tesla.” Some Tesla investors were weary that Musk’s loss would force him to sell more Tesla stock, he added.
Earlier too, the world’s second-richest person has created legal and regulatory turmoil by his sometimes impulsive use of Twitter, the social media platform he acquired for $44 billion in October.
In recent months, Musk’s attention has been diverted between Tesla, his rocket company SpaceX and now his social media company Twitter. Tesla investors have expressed apprehension that running the social media company has taken up too much of his focus.
The shareholders of Tesla even claimed that Musk misled them when he tweeted on Aug. 7, 2018, that he was considering taking the company private at $420 per share, a premium of about 23% to the previous day’s close, and had ”funding secured.”
They say Musk lied when he tweeted later that day that “investor support is confirmed.”The stock price surged after the tweets and then fell again after August 17, 2018, as it became clear the buyout would not happen.
During closing arguments, Porritt said the billionaire CEO is not above the law and should be held accountable for the tweets.
“This case ultimately is about whether rules that apply to everyone else should also apply to Elon Musk,” he added.
Spiro countered that Musk’s “funding secured” tweet was “technically inaccurate” but that investors only cared that Musk was considering a buyout.
“The whole case is built on bad word choice,” he said. “Who cares about bad word choice?”
“Just because it’s a bad tweet doesn’t make it fraud,” Spiro said during closing arguments.
An economist hired by the shareholders had calculated investor losses as high as $12 billion. In the three-week trial, Musk spent around nine hours on the witness stand, telling jurors he believed the tweets were truthful. He said he had lined up the necessary financing, including a verbal commitment from Saudi Arabia’s sovereign wealth fund, the Public Investment Fund. The fund later reversed on its commitment.
Later, Musk concluded that he believed he could have sold enough shares of his rocket company SpaceX to fund a buyout, and ”felt funding was secured” with SpaceX stock alone.
